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Chapter 5: 11BE (page 239)

Stowe Company鈥檚 December 31, 2017, trial balance includes the following accounts: Investment in Common Stock \(70,000, Retained Earnings \)114,000, Trademarks \(31,000, Preferred Stock \)152,000, Common Stock \(55,000, Deferred Income Taxes \)88,000, Paid-in Capital in Excess of Par鈥擟ommon Stock \(174,000, and Noncontrolling Interest \)63,000. Prepare the stockholders鈥� equity section of the balance sheet.

Short Answer

Expert verified

The stockholder鈥檚 equity section of the balance sheet totals$558,000.

Step by step solution

01

Definition of Additional Paid-in-Capital

The excess amount received by the business entity for issuing shares in excess of the par value of the shares is reported in the accounts as additional paid-up capital under the equity side of the balance sheet.

02

Stockholder’s Equity Section

Particular

Amount $

Common stock

$55,000

Preferred stock

152,000

Paid-in-capital in excess of par 鈥� Common stock

174,000

Retained earnings

114,000

Non-Controlling interest

63,000

Total stockholder鈥檚 equity

$558,000

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Most popular questions from this chapter

Using the information in BE5-14, determine Martinez鈥檚 free cash flow, assuming that it reported net cash provided by operating activities of \(400,000.

BE5-14 (L05) Martinez Corporation engaged in the following cash transactions during 2017.

Sale of land and building \)191,000

Purchase of treasury stock 40,000

Purchase of land 37,000

Payment of cash dividend 95,000

Purchase of equipment 53,000

Issuance of common stock 147,000

Retirement of bonds 100,000

Compute the net cash provided (used) by investing activities.

The comparative balance sheets of Madrasah Corporation at the beginning and end of the year 2017 appear below.

MADRASAH CORPORATION

BALANCE SHEETS

Assets

Dec 31, 2017

Jan 1, 2017

Inc./Dec.

Cash

\(20,000

\)13,000

\(7,000 Inc.

Accounts receivable

106,000

88,000

18,000 Inc.

Equipment

39,000

22,000

17,000 Inc.

Less: Accumulated depreciation 鈥� Equipment

17,000

11,000

6,000 Inc.

Total

\)148,000

\(112,000

Liabilities and Stockholder鈥檚 equity

Account payable

\)20,000

\(15,000

5,000 Inc.

Common stock

100,000

80,000

20,000 Inc.

Retained earnings

28,000

17,000

11,000 Inc.

Total

\)148,000

\(112,000

Net income of \)44,000 was reported, and dividends of $33,000 were paid in 2017. New equipment was purchased and none was sold.

Instructions

(a) Prepare a statement of cash flows for the year 2017.

(b) Compute the current ratio (current assets 梅 current liabilities) as of January 1, 2017, and December 31, 2017, and compute free cash flow for the year 2017.

(c) In light of the analysis in (b), comment on Madrasah鈥檚 liquidity and financial flexibility.

EXCEL (Balance Sheet Preparation) Presented below are a number of balance sheet items for Montoya, Inc., for the current year, 2017.

Goodwill

\(125,000

Accumulated depreciation - equipment

\)292,000

Payroll tax payable

177,591

Inventory

239,800

Bond payable

300,000

Rent payable (short-term)

45,000

Discount on bond payable

15,000

Income tax payable

98,362

Cash

360,000

Rent payable (long-term)

480,000

Land

480,000

Common stock, \(1 par value

200,000

Notes receivable

445,700

Preferred stock, \)10 par value

150,000

Note payable

265,000

Prepaid expenses

87,920

Account payable

490,000

Equipment

1,470,000

Retained earnings

Debt investment (trading)

121,000

Income tax receivable

97,630

Accumulated depreciation 鈥� building

270,200

Note payable (Long-term)

1,600,000

Buildings

1,640,000

Instructions

Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term unless stated otherwise. The cost and fair value of equity investments (trading) are the same.

2. Current assets under IFRS are listed generally:

(a) by importance.

(b) in the reverse order of their expected conversion to cash.

(c) by longevity.

(d) alphabetically.

(Preparation of a Classified Balance Sheet) Assume that Denis Savard Inc. has the following accounts at the end of the current year.

1. Common Stock.

2. Discount on Bonds Payable.

3. Treasury Stock (at cost).

4. Notes Payable (short-term).

5. Raw Materials.

6. Preferred Stock Investments (long-term).

7. Unearned Rent Revenue.

8. Work in Process.

9. Copyrights.

10. Buildings.

11. Notes Receivable (short-term).

12. Cash.

13. Salaries and Wages Payable.

14. Accumulated Depreciation鈥擝uildings.

15. Restricted Cash for Plant Expansion.

16. Land Held for Future Plant Site.

17. Allowance for Doubtful Accounts.

18. Retained Earnings.

19. Paid-in Capital over Par鈥擟ommon Stock.

20. Unearned Subscriptions Revenue.

21. Receivables鈥擮fficers (due in one year).

22. Inventory (finished goods).

23. Accounts Receivable.

24. Bonds Payable (due in 4 years).

25. Noncontrolling Interest.

Instructions

Prepare a classified balance sheet in good form. (No monetary amounts are necessary.)
See all solutions

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