P5 4 (Preparation of a Corrected Balance Sheet) Presented below and on the next page is the balance sheet of Kishwaukee Corporation as of December 31, 2012.
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Assets |
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Goodwill (Note 2) |
$ 120,000 |
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Buildings (Note 1) |
1,640,000 |
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Inventory |
312,100 |
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Land |
950,000 |
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Accounts receivable |
170,000 |
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Treasury stock (50,000 shares) |
87,000 |
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Cash on hand |
175,900 |
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Assets allocated to trustee for plant expansion |
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Cash in bank |
70,000 |
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Debt investments (held to maturity) |
138,000 |
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$3,663,000 |
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Equities |
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Notes payable (Note 3) |
$ 600,000 |
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Common stock, authorized and issued, 1,000,000 shares, no par |
1,150,000 |
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Retained earnings |
858,000 |
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Appreciation capital (Note 1) |
570,000 |
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Income tax payable |
75,000 |
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Reserve for depreciation recorded to date on the building |
410,000 |
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$3,663,000 |
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Note 1: Buildings are stated at cost, except for one building that was recorded at appraised value. The excess of appraisal value over cost was $570,000. Depreciation has been recorded based on cost.
Note 2: Goodwill in the amount of $120,000 was recognized because the company believed that book value was not an accurate representation of the fair value of the company. The gain of $120,000 was credited to Retained Earnings.
Note 3: Notes payable are long term except for the current installment due of $100,000.
Instructions
Prepare a corrected classified balance sheet in good form. The notes above are for information only.