Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Walbash Company presents the following December 31, 2016, balance sheet: Walbash Company Sheet of Balances for Year Ended December 31, 2016 Current Assets $ 44,300

Walbash Company presents the following December 31, 2016, balance sheet:

Walbash Company

Sheet of Balances for Year Ended December 31, 2016

Current Assets $ 44,300

Long-term investments13,600

Property, plant, and equipment123,500

Intangible assets7,700

Other assets13,600

______

Total assets $202,700

Current liabilities $ 66,600

Long-term liabilities 24,100

Contributed capital 17,000

Unrealized capital 22,500

Retained earnings 72,500

______

Total equities $202,700

The following information is also available:

1. Current assets include cash, $3,800; accounts receivable, $18,500; notes receivable (maturity date July 1, 2021), $10,000; and land, $12,000.
2. Long-term investments include a $4,600 investment in available-for-sale securities that are expected to be sold in 2017 and a $9,000 dollar investment in Dray Company bonds that are expected to be held until their December 31, 2019, maturity date.
3. Property, plant, and equipment include buildings costing $63,400, inventory costing $30,500, and equipment costing $29,600.
4. Intangible assets include patents that cost $8,200 (and on which $2,300 amortization has accumulated) and WalbashCo. treasury stock that cost $1,800.
5. Other assets include prepaid insurance (which expires on November 30, 2017), $2,900; sinking fund for bond retirement, $7,000; and trademarks that cost $3,700 and are not impaired.
6. Current liabilities include accounts payable, $19,400; bonds payable (maturity date December 31, 2021), $40,000; and accrued income taxes payable, $7,200.
7. Long-term liabilities include accrued wages, $4,100; and mortgage payable (which is due in five equal annual payments starting December 31, 2017), $20,000.
8. Contributed capital includes common stock ($5 par), $11,000; and preferred stock ($100 par), $6,000.
9. Unrealized capital includes premium on bonds payable, $4,300; additional paid-in capital on preferred stock, $2,400; additional paid-in capital on common stock, $14,700; and unrealized increase in value of securities available for sale $1,100.
10. Retained earnings includes unrestricted retained earnings, $37,800; allowance for doubtful accounts, $700; and accumulated depreciation on building and equipment of $21,000 and $13,000, respectively.
11. The following occurred in 2016 but were not included in the information above:
a. Walbash has discovered that a product it began manufacturing and selling in 2016 has defective bearings, sometimes causing a wheel to fall off. Walbash has issued a recall notice in newspapers and magazines in which it offers to replace the bearings. It estimates the cost of $200,000 for these repairs. No lawsuits have been filed for injury claims, although the company feels that there is a reasonable possibility that claims may total as high as $2 million.
b. Walbash has an incinerator behind one of its stores which is used to burn cardboard boxes received in shipments of inventory. The state environmental protection agency filed suit against the company in August 2016 for air pollution. Walbash expects to stop using the incinerator and begin recycling. However, its lawyers believe that it is probable that a fine of between $40,000 and $60,000 will be levied against the company, although they cannot predict the exact amount.
c. Walbash sold 1000 software packages for $300 eachon credit (ignore cost of goods sold). With each software package, Walbash offered a premium in the form of a USB drive for the return of one proof of purchase. The offer expires June 30, 2017. The cost of each USB drive is $5 and Walbash estimates that 80% of the premiums will be redeemed. In 2016, 540 premiums were redeemed.

Required: Based on the preceding information, prepare a properly classified December 31, 2016, balance sheet for Walbash.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting An International Introduction

Authors: David Alexander

2nd Edition

9780273685203

More Books

Students also viewed these Accounting questions

Question

Understand developments in knowledge creation and management

Answered: 1 week ago

Question

Explain key ideas of workplace learning

Answered: 1 week ago

Question

Explain how HRD may be implemented

Answered: 1 week ago