The following balance sheet is submitted to you for inspection and review.
Appalachian Freight Company
Balance Sheet
December 31, 2013
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,050
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,500
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,000
Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,800
Property, plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376,800
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $747,150
Liabilities and Owners' Equity
Miscellaneous liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,600
Loan payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,200
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,250
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,000
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458,100
Total liabilities and owners' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $747,150
In the course of the review, you find the following data:
(a) The possibility of uncollectible accounts on accounts receivable has not been considered. It is estimated that uncollectible accounts will total $4,800.
(b) The amount of $45,000 representing the cost of a large-scale newspaper advertising campaign completed in 2013 has been added to the inventories because it is believed that this campaign will benefit sales of 2014. It is also found that inventories include merchandise of $16,250 received on December 31 that has not yet been recorded as a purchase.
(c) The books show that property, plant, and equipment have a cost of $556,800 with depreciation of $180,000 recognized in prior years. However, these balances include fully depreciated equipment of $85,000 that has been scrapped and is no longer on hand.
(d) Miscellaneous liabilities of $3,600 represent salaries payable of $9,500, less noncurrent advances of $5,900 made to company officials.
(e) Loan payable represents a loan from the bank that is payable in regular quarterly installments of $6,250.
(f) Tax liabilities not shown are estimated at $18,250.