(Balance Sheet Adjustment and Preparation) Presented below is the balance sheet of Sargent Corporation for the current year, 2012.
|
SARGENT CORPORATION |
|||
|
Current assets |
$485,000 |
Current liabilities |
$380,000 |
|
Investments |
640,000 |
Long term liabilities |
1,000,000 |
|
Property, plant, and equipment |
1,720,000 |
Stockholders’ equity |
1,770,000 |
|
Intangible assets |
305,000 |
$3,150,000 |
|
|
$3,150,000 |
|||
The following information is presented.
1. The current assets section includes: cash $150,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned revenue $5,000. Inventories are stated on the lower of FIFO cost or market.
2. The investments section includes: the cash surrender value of a life insurance contract $40,000; investments in common stock, short term (trading) $80,000 and long term (available for sale) $270,000; and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same.
3. Property, plant, and equipment includes: buildings $1,040,000 less accumulated depreciation $360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000.
4. Intangible assets include: a franchise $165,000; goodwill $100,000; and discount on bonds payable $40,000.
5. Current liabilities include: accounts payable $140,000; notes payable—short term $80,000 and long term $120,000; and taxes payable $40,000.
6. Long term liabilities are composed solely of 7% bonds payable due 2020.
7. Stockholders’ equity has: preferred stock, no par value, authorized 200,000 shares, issued 70,000 shares for $450,000; and common stock, $1.00 par value, authorized 400,000 shares, issued 100,000 shares at an average price of $10. In addition, the corporation has retained earnings of $320,000.
Instructions
Prepare a balance sheet in good form, adjusting the amounts in each balance sheet classification as affected by the information given above.