Problem 1 (15 Points) You have been asked to assist the chief accountant of the Stephen King Corporation in the preparation of year, 2011. Stephen King Corporation BALANCE SHEET December 31, 2011 Current asscts Investrments Property, plant, and equipment $ 435,000 640,000 1,720,000 5,000 Intangible assets $3.100,000 330,000 1,000,000 770.000 $3,100,000 Current liabilities Long-term liabilities Stockholders' equity Consider the following information 1. The current assets section includes: cash $100,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned revenue $5,000. The cash balance is composed of $114,000, less a bank overdraft of $14,000. Inventories are stated on the lower of the FIFO cost or market. 2 The investments section includes: the cash surrender value of a life insurance contract $40,000. investment in common stock, short-term (trading) $80,000 and long-term (available-for-sale) $270,000; and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same. 3. Property, plant, and equipment includes: buildings $1,040,000 less accumulated depreciation 4. Intangible assets include: a franchise $165,000; goodwill $100,000; and discount on bonds payable 5. Current liabilities include: accounts payable $90,000; notes payable - short term $80,000 and long- 6. Long-term liabilities are compose solely of 10% bonds payable due in 2020. $360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000. $40,000 term $120,000; and taxes payable $40,000. Stockholders' equity has: preferred stock, no par value, authorized 200,000 shares, issued 70,000 shares for $450,000; and common stock, $1.00 par value, authorized 400,000 shares, issued 100,000 shares at an average price of $10. In addition, the corporation has retained earnings of $320,000. 7. The company's management does not elect to use the fair value option for any of its financial assets or liabilities Prepare a Classified balance sheet