using GAAP

CHAPTER 5 The Powell Corporation began operations on January 1, 20x1. A preliminary draft of a balance sheet for the Powell Corporation as of December 31, 20x5 is presented below. Powell Corporation Balance Sheet (draft) December 31, 20x5 (Accounts with debit balances) 124,000 Accounts recelvable Bond Retirement Fund 148,600 1,467,000 128,550 960,000 1,038,000 262,164 Buildings Cash Equipment Land Merchandise Inventory Office supplies Prepaid Insurance Treasury Stock Total 1,225 8,832 96,000 $ 4,234,371 (Accounts with credit balances) 300,000 Accounts payable Accumulated depreciation- buildings Accumulated depreciation -equipment Bonds payable (due October 1, 20x9) Capital - appreciated value of land Capital stock Dividends payable Income taxes payable Notes payable (short-term) Notes payable (long-term) Retained earnings Total ? 600,000 230,000 920,000 24,600 77,500 100,800 378,000 ? ? (Note: See next page for additional information.) Additional Information: Accounts recelvable: An estimate of uncollectible accounts at year-end of 1.5 % of accounts recelvable has not yet been calculated. 1) Bond retirement fund: The fund has cash on hand of $43,000 and equity investments (at fair value) of $105,600.) 2) Land: The land account represents three pieces of property. The first two pieces relate to the land on which the two buildings stand. The third plece is undeveloped at the present time; the company plans to use the land in the future for the construction of a health facility and cafeteria for its employees. Construction has not yet begun. The three pieces of land are reported, as follows: 3) 360,000 312,000 366,000 Land (1) Land (2) Land (3) The first two pieces of land are reported at cost. The amount reported for the third piece of land ($366,000) represents the cost of $136,000 plus $230,000 based on a recent appralsal. The additional appraised amount is reflected in the "capital- appreciated value" account. Buildings: The corporation owns two buildings; both were acquired when the corporation was started on January 1, 20x1. Straight-line depreciation based on a 30 year life (with estimated salvage value of 20 % ) is used for each building. Depreciation for the 4) curtent year has not yet been recorded. Equipment: The equipment was acquired on January 1, 20x2, for $960,000. The double- declining balance method, based on an eight-year life (with estimated salvage value of 15 % ) , has been used. Depreciation for the current year has not yet been recorded. 5) Merchandise inventory: Inventories are valued at lower-of-cost-(FI FO basis) or-market 6) The office supplies amount represents the balance at the beginning of the An inventory of office supplies at year-end Office Supplies: year plus additional amounts purchased. is determined to be $490. 7) Prepaid Insurance: There are two (3-year) policies outstanding. Policy A was acquired on June 1, 20x4; policy B was acquired on November 1, 20x5. The balance reported is the 8) unadjusted balance (as of 12/31/x5) for polic A ($2,784nd policy B ($6,048) ACCOUNTING 2101/6101-TESTING YOUR KNOWLEDGE Page 3 CHAPTER 5 Additional Information-continued: Ireasury Stock: The amount represents 2,400 shares purchased at a price of $40 per share. 9) 10) Accounts payable: The amount represents the net amount due; a return of merchandise inventory occurred after the original amount due had been paid to the vendor. Cost of inventory returned: 8,000 11) Bonds payable: The bonds pay interest each April 1 and October 1. Accrued interest from October 1, 20c5 through December 31, 20x5 has not yet been recorded. Stated Interest Rate: 8 % Capital stock: The amount in this account represents the total amount received when the shares were originally sold. There are 100,000 shares authorlzed, 30,000 sbares issued, and 28000-shares outstanding. 27,600 12) $ Par value per share: 13) Dividends payable: Dividends were declared on December 15, 20x5, payable on January 15, 20x6 to stockholders on record at January 3, 20x6. 14) Notes payable (short-term): This amount represents a 6-month note dated November 1, 20x5: Accrued interest has not yet been recorded. Stated interest rate: 4% 15) Notes payable (long-term): This amount represents a 3-year note dated May 1, 20x5; interest is payable each May 1st; total principal and final interest payment are due on May 1, 20x8. Accrued interest has not yet been recorded. Stated Interest rate: 5% REQUIRED: Prepare a classified balance sheet, in good form, as of December 31, 20x5. Where necessary, prepare supporting schedules with clearly presented calculations CHAPTER 5 The Powell Corporation began operations on January 1, 20x1. A preliminary draft of a balance sheet for the Powell Corporation as of December 31, 20x5 is presented below. Powell Corporation Balance Sheet (draft) December 31, 20x5 (Accounts with debit balances) 124,000 Accounts recelvable Bond Retirement Fund 148,600 1,467,000 128,550 960,000 1,038,000 262,164 Buildings Cash Equipment Land Merchandise Inventory Office supplies Prepaid Insurance Treasury Stock Total 1,225 8,832 96,000 $ 4,234,371 (Accounts with credit balances) 300,000 Accounts payable Accumulated depreciation- buildings Accumulated depreciation -equipment Bonds payable (due October 1, 20x9) Capital - appreciated value of land Capital stock Dividends payable Income taxes payable Notes payable (short-term) Notes payable (long-term) Retained earnings Total ? 600,000 230,000 920,000 24,600 77,500 100,800 378,000 ? ? (Note: See next page for additional information.) Additional Information: Accounts recelvable: An estimate of uncollectible accounts at year-end of 1.5 % of accounts recelvable has not yet been calculated. 1) Bond retirement fund: The fund has cash on hand of $43,000 and equity investments (at fair value) of $105,600.) 2) Land: The land account represents three pieces of property. The first two pieces relate to the land on which the two buildings stand. The third plece is undeveloped at the present time; the company plans to use the land in the future for the construction of a health facility and cafeteria for its employees. Construction has not yet begun. The three pieces of land are reported, as follows: 3) 360,000 312,000 366,000 Land (1) Land (2) Land (3) The first two pieces of land are reported at cost. The amount reported for the third piece of land ($366,000) represents the cost of $136,000 plus $230,000 based on a recent appralsal. The additional appraised amount is reflected in the "capital- appreciated value" account. Buildings: The corporation owns two buildings; both were acquired when the corporation was started on January 1, 20x1. Straight-line depreciation based on a 30 year life (with estimated salvage value of 20 % ) is used for each building. Depreciation for the 4) curtent year has not yet been recorded. Equipment: The equipment was acquired on January 1, 20x2, for $960,000. The double- declining balance method, based on an eight-year life (with estimated salvage value of 15 % ) , has been used. Depreciation for the current year has not yet been recorded. 5) Merchandise inventory: Inventories are valued at lower-of-cost-(FI FO basis) or-market 6) The office supplies amount represents the balance at the beginning of the An inventory of office supplies at year-end Office Supplies: year plus additional amounts purchased. is determined to be $490. 7) Prepaid Insurance: There are two (3-year) policies outstanding. Policy A was acquired on June 1, 20x4; policy B was acquired on November 1, 20x5. The balance reported is the 8) unadjusted balance (as of 12/31/x5) for polic A ($2,784nd policy B ($6,048) ACCOUNTING 2101/6101-TESTING YOUR KNOWLEDGE Page 3 CHAPTER 5 Additional Information-continued: Ireasury Stock: The amount represents 2,400 shares purchased at a price of $40 per share. 9) 10) Accounts payable: The amount represents the net amount due; a return of merchandise inventory occurred after the original amount due had been paid to the vendor. Cost of inventory returned: 8,000 11) Bonds payable: The bonds pay interest each April 1 and October 1. Accrued interest from October 1, 20c5 through December 31, 20x5 has not yet been recorded. Stated Interest Rate: 8 % Capital stock: The amount in this account represents the total amount received when the shares were originally sold. There are 100,000 shares authorlzed, 30,000 sbares issued, and 28000-shares outstanding. 27,600 12) $ Par value per share: 13) Dividends payable: Dividends were declared on December 15, 20x5, payable on January 15, 20x6 to stockholders on record at January 3, 20x6. 14) Notes payable (short-term): This amount represents a 6-month note dated November 1, 20x5: Accrued interest has not yet been recorded. Stated interest rate: 4% 15) Notes payable (long-term): This amount represents a 3-year note dated May 1, 20x5; interest is payable each May 1st; total principal and final interest payment are due on May 1, 20x8. Accrued interest has not yet been recorded. Stated Interest rate: 5% REQUIRED: Prepare a classified balance sheet, in good form, as of December 31, 20x5. Where necessary, prepare supporting schedules with clearly presented calculations