Problem3-47.Classified Balance Sheet

Blake Matthews incorporated his paper manufacturing operations on January 1, 2015, by issuing5,000sharesof$1par common stock to himself. The following balance sheet for the new corporation was prepared.

Looseleaf Corporation Balance Sheet January 1, 2015 Cash . .. $ 15,000 Accounts receivable.......... ..!. 55,000 Inventory ! !! !! ! 105,000 Equipment........ .. .. 1 10.000 Total. .... .. . $285,000 Accounts payable-suppliers ... $ 85,000 Capital stock, $1 par. ...... 5,000 Additional paid-in capital. .... 195,000 Total. $285,000During 2015, Looseleaf Corporation engaged in the following transactions. {a} Looseleaf Corporation produced paper costing $305,000. Paper costs consisted of the following: 3302,1310, raw materials purchased: $43,000, labor; and $40,000, overhead. Looseleaf Corporation paid the $35,000 owed to suppliers as of January 1 and $210,000 of the $301,000 of raw materials purchased during the year. All labor, except for $0,000, and recorded overhead were paid in cash during the year. Cither operating expenses of $3,500 were incurred and paid in 2015. {b} Paper costing $320,000 was sold during 2015 for $390,010. All sales were made on credit. and collections on receivables were $350,013]. {c} Looseieaf Corporation purchased machinery (fair market value = $245,000} by trading in old equipment costing $140,000 and paying $105,000 in cash. There is no accumulated depreciation on the old equipment as it was revalued when the new corporation was formed. {d} Looseleaf Corporation issued an additional 15,000 shares of common stock for $10 per share and declared a dividend of $1.75 per share to all stockholders of record as of December 31, 2015. payable on January 15, 2016. {e} Depreciation expense for 2015 was $45,000. The allowance for bad debts after yearend adjustments is $4,000