The following balance sheet was prepared by the bookkeeper for Kraus Company as of December 31, 2020.

Kraus Company

Balance Sheet

as of December 31, 2020

Cash $ 80,000 Accounts payable $ 75,000

Accounts receivable (net) 52,200 Bonds payable 100,000

Inventory 57,000 Stockholders' equity 218,500

Investments 76,300

Equipment (net) 96,000

Patents 32,000

$393,500 $393,500

The following additional information is provided:

1. Cash includes the cash surrender value of a life insurance policy $9,400, and a bank overdraft of $2,500 has been deducted.

2. The net accounts receivable balance includes:

(a) accounts receivabledebit balances $60,000;

(b) accounts receivablecredit balances $4,000;

(c) allowance for doubtful accounts $3,800.

3. Inventory does not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.

4. Investments include investments in common stock, trading $19,000 and available-for-sale $48,300, and franchises $9,000.

5. Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.

Instructions

Prepare a balance sheet in good form and explain the entries.

KRAUS COMPANY