The following is the balance sheet of Ingram Industries:
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INGRAM INDUSTRIES |
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Assets |
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Current assets: |
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Cash (including $13,000 in sinking fund for bonds payable) |
$70,000 |
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Marketable securities |
23,400 |
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Investment in subsidiary company |
23,000 |
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Accounts receivable |
21,000 |
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Inventories (lower of cost or market) |
117,000 |
$254,400 |
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Plant assets: |
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Land and buildings |
$160,000 |
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Less: Accumulated depreciation |
100,000 |
60,000 |
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Investments: |
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Treasury stock |
4,000 |
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Deferred charges: |
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Discount on bonds payable |
$6,000 |
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Prepaid expenses |
2,000 |
8,000 |
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$326,400 |
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Liabilities and Stockholders’ Equity |
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Liabilities: |
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Notes payable to bank |
$60,000 |
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Accounts payable |
18,000 |
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Bonds payable |
61,000 |
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Total liabilities |
$139,000 |
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Stockholders’ equity: |
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Preferred and common (each $10 par, 5,000 shares preferred and 6,000 shares common) |
$110,000 |
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Capital in excess of par |
61,000 |
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Retained earnings |
16,400 |
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|
187,400 |
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Total liabilities and stockholders’ equity |
$326,400 |
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Required
Indicate your criticisms of the balance sheet and briefly explain the proper treatment of any item criticized.