RAINBOW COMPANY

Balance Sheet

As of Year End

Dec. $31,$

FY$2$

Dec. $31,$

FY$1$

Assets

Cash and cash equivalents

$...................$

$ $19,000$

$ $25,000$

Accounts receivable

$.........................$

$40,000$

$30,000$

Inventory

$..................................$

$103,000$

$77,000$

Prepaid expenses

$...........................$

$10,000$

$6,000$

Investments$$Available$$for$$sale $($AFS$)$

$...........$

$$

$57,000$

Land

$.....................................$

$190,000$

$100,000$

Buildings

$..................................$

$445,000$

$350,000$

Accumulated depreciation$$Buildings

$...........$

$(91,000)$

$(75,000)$

Equipment

$................................$

$179,000$

$225,000$

Accumulated depreciation$$Equipment

$..........$

$(42,000)$

$(46,000)$

Patents

$...................................$

$50,000$

$32,000$

Total assets

$................................$

$$903,000$

$$781,000$

Liabilities and Stockholders$$ Equity

Accounts payable

$...........................$

$ $20,000$

$ $16,000$

Interest payable

$............................$

$6,000$

$5,000$

Income tax payable

$..........................$

$8,000$

$10,000$

Bonds payable

$.............................$

$155,000$

$125,000$

Preferred stock $($$$100$ par value$)$

$...............$

$100,000$

$75,000$

Common stock $($$$5$ par value$)$

$..................$

$379,000$

$364,000$

Paid$$in capital in excess of par value$$Common $...$

$133,000$

$124,000$

Retained earnings

$..........................$

$102,000$

$55,000$

AOCI $($unrealized gain on investments$)$

$..........$

$$

$7,000$

Total liabilities and equity

$.....................$

$$903,000$

$$781,000$

During FY$2,$ the following transactions and events occurred in addition to the company$$s usual busi$-$

ness activities.

$1.$ Sold AFS investments costing $$50,000$ for $$60,000$ cash. Unrealized gains totaling $$7,000$ related

to these investments had been recorded in earlier years.

$2.$ Purchased land for cash.

$3.$ Capitalized an expenditure made to improve the building.

$4.$ Sold equipment for $$14,000$ cash that originally cost $$46,000$ and had $$27,000$ accumulated

depreciation.

$5.$ Issued bonds payable at face value for cash.

$6.$

Acquired a patent with a fair value of $$25,000$ by issuing $250$ shares of preferred stock at par value.

$7.$ Declared and paid a $$50,000$ cash dividend.

$8.$ Issued $3,000$ shares of common stock for cash at $$8$ per share.

$9.$ Recorded depreciation of $$16,000$ on buildings and $$23,000$ on equipment.

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