Preparation of Corrected Balance Sheet
The following balance sheet was prepared for Jared Corporation as of December 31, 2008.
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Jared Corporation |
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Balance Sheet |
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December 31, 2008 |
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Assets |
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Liabilities and Owners’ Equity |
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Current assets: |
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Current liabilities: |
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Cash |
$ 12,500 |
Accounts payable |
$ 3,400 |
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Investment securities |
8,000 |
Other current liabilities |
2,000 |
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Accounts receivable, net |
21,350 |
Total current liabilities |
$ 5,400 |
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Inventory |
31,000 |
Long term liabilities |
32,750 |
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Other current assets |
14,200 |
Total liabilities |
$ 38,150 |
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Total current assets |
$ 87,050 |
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Noncurrent assets: |
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Owners’ equity: |
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Property, plant, and equipment, net |
$ 64,800 |
Common stock |
$ 50,000 |
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Treasury stock |
4,500 |
Retained earnings |
81,800 |
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Other noncurrent assets |
13,600 |
Total owners’ equity |
$131,800 |
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Total noncurrent assets |
$ 82,900 |
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Total assets |
$169,950 |
Total liabilities and owners’ equity |
$169,950 |
The following additional information relates to the December 31, 2008, balance sheet.
(a) Cash includes $4,000 that has been restricted to the purchase of manufacturing equipment
(a noncurrent asset).
(b) Investment securities include $2,750 of stock that was purchased in order to give the company significant ownership and a seat on the board of directors of a major supplier.
(c) Other current assets include a $4,000 advance to the president of the company. No due date has been set.
(d) Long term liabilities include bonds payable of $10,000. Of this amount, $2,500 represents bonds scheduled to be redeemed in 2009.
(e) Long term liabilities also include a $7,000 bank loan. On May 15, the loan will become due on demand.
(f) On December 21, dividends in the amount of $15,000 were declared to be paid to shareholders of record on January 25.These dividends have not been reflected in the financial statements.
(g) Cash in the amount of $19,000 has been placed in a restricted fund for the redemption of preferred stock in 2009. Both the cash and the stock have been removed from the balance sheet.
(h) Property, plant, and equipment includes land costing $8,000 that is being held for investment purposes and that is scheduled to be sold in 2009.
Based on the information provided, prepare a corrected balance sheet.