Question
Ron Abrams has come into your office for his weekly 1 on 1 in which you update him on your weekly progress on your projects.
Ron Abrams has come into your office for his weekly 1 on 1 in which you update him on your weekly progress on your projects. He has arrived with a stack of paperwork in his hands and a befuddled look on his face.You ask what's going on and he responds as follows. "Last year, as you know, we purchased a bankrupt, closed down bottling facility in The Ukraine. I don't know if you know this but in countries other than Canada they are using somewhat different accounting policies than we do, and the reports I have for the first few months of operations for that location look nothing like anything I have seen before. I'm aware that the company made no money this month as it's had no sales or operations, but I cannot understand our capital position. I'm leaving you with a new project. I know you've been learning accounting so I want you to take the opening information for the business from the date of purchase and come up with the balance sheet as it should appear to me as a Canadian Reader." You are somewhat puzzled with this new challenge, yet flattered at the same time, and agree to take it on.
Given:
The newly purchased firm was bought on November 1.At inception the balance sheet accounts of the firm were as follows:
Account Name | $ | Account Name | $ | |
Accounts Payable | 85,000 | Bonds Payable (Over 1 Year) | 45,000 | |
Accounts Receivable | 67,000 | Share Capital | 936,200 | |
Land | 490,000 | Furniture and Fixtures | 15,000 | |
Building | 320,000 | Wages Payable | 55,000 | |
Equipment | 175,000 | Bottle Processing Patent Fee's Payable | 25,000 | |
Cash | 2,200 | Taxes Payable | 58,000 | |
Notes Payable | 60,000 | Bottle Inventory | 195,000 |
During the month of November the following transactions occurred:
Accounts Receivable for $16,000 was collected.
Wages due of $15,000 were paid out in cash.
$175,000 in Equipment was purchased on credit ($100 was due on delivery and was paid in cash).
Their land was appraised and found to be worth $560,000.
A stakeholder, Bruce Wayne, provided the company with equipment and in return received $65,000 in shares.
$300,000 in shares was retired for bonds payable on December 15, 2025.
Bottle Processing Patent Fees were paid completely out on Credit.
$175,000 in Old Bottles was returned to the former supplier for their cash value.
A bank loan for $65,000 was taken out. The amount was kept in cash over the end of the month.
Required:
Create a Balance Sheet for November 30th assuming no other transactions occurred for the month other than those noted above.
1-Conversion to Canadian Balance Sheet and T-Accounts (17 marks)
2- Final Balance Sheet (23 Marks)
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