Question 12 E E5-12 (L03) (Preparation of a Ba... [FREE SOLUTION]

Chapter 5: Question 12 E (page 245)

E5-12 (L03) (Preparation of a Balance Sheet) Presented below is the trial balance of Scott Butler Corporation at December 31, 2017.
Particular
Debit
Credit
Cash
$197,000
Sales Revenue
$8,100,000
Debt investment (trading) (at cost $145,000)
153,000
Cost of goods sold
4,800,000
Debt investment (long-term)
299,000
Equity Investment (long-term)
277,000
Notes payable (Short-term)
90,000
Account payable
455,000
Selling expenses
2,000,000
Investment revenue
63,000
Land
260,000
Buildings
1,040,000
Dividend payable
136,000
Accrued Liabilities
96,000
Accounts Receivable
435,000
Accumulated depreciation 鈥� Building
152,000
Allowance for doubtful accounts
25,000
Administrative expenses
900,000
Interest expenses
211,000
Inventory
597,000
Gain
80,000
Notes payable
900,000
Equipment
600,000
Bonds payable
1,000,000
Accumulated depreciation 鈥� Equipment
60,000
Franchises
160,000
Common stock
1,000,000
Treasury stock
191,000
Patents
195,000
Retained Earnings
78,000
Paid-in-capital in excess of par
80,0000
Total
$12,315,000
$12,315,000
Instructions Prepare a balance sheet at December 31, 2017, for Scott Butler Corporation. (Ignore income taxes.)

Short Answer

Expert verified

The balance sheet of the company totals$3,976,000.

Step by step solution

Definition of Accrued Liabilities

Accrued Liabilities can be defined as the expenses incurred by the business entity but are still unpaid. These unpaid expenses are reported as current liabilities in the accrued liabilities account.

Classified Balance Sheet

Particular	Amount $	Amount $
Assets
Current assets
Cash		$197,000
Debt investment (trading) (at cost $145,000)		153,000
Accounts Receivable	435,000
Less: Allowance for doubtful accounts	(25,000)	410,000

Inventory		597,000

Property, Plant, and Equipment
Land		260,000
Buildings	1,040,000
Less: Accumulated depreciation 鈥� Building	(152,000)	888,000

Equipment	600,000
Less: Accumulated depreciation 鈥� Equipment	(60,000)	540,000

Long-term Investment
Debt investment (long-term)		299,000
Equity Investment (long-term)		277,000

Intangible assets
Franchises		160,000
Patents		195,000
Total assets		3,976,000

Liabilities
Current liabilities
Dividend payable		136,000
Accrued Liabilities		96,000
Notes payable (Short-term)		90,000
Account payable		455,000

Non-Current liabilities
Notes payable		900,000
Bonds payable		1,000,000
Total liabilities		2,677,000

Equity
Common stock		1,000,000
Paid-in-capital in excess of par		80,000
Treasury stock		(191,000)

Reserve and surplus
Retained Earnings (332,000 + 78,000)		410,000
Total liabilities and Equity		$3,976,000

Working note:

Calculation of net income

Particular	Amount $
Sales Revenue	$8,100,000
Less: Cost of goods sold	(4,800,000)
Gross profit	3,300,000
Less: Other expenses
Selling expenses	(2,000,000)
Administrative expenses	(900,000)
Interest expenses	(211,000)
Net Operating income	189,000
Add: Gains	80,000
Add: Investment revenue	63,000
Total income	$332,000

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(a) Current assets	(f) Current liabilities
(b) Investments	(g) Noncurrent liabilities
(c) Property, plant, and equipment	(h) Capital stock
(d) Intangible assets	(i) Additional paid-in capital
(e) Other assets	(j) Retained earnings

1. Preferred stock	11. Cash surrender value of life insurance
2. Goodwill	12. Note payable
3. Salaries and wages payable	13. Supplies
4. Account payable	14. Common stock
5. Building	15. Land
6. Equity investment (trading)	16. Bond sinking fund
7. Current maturity of long-term debt	17. Inventory
8. Premium on bond payable	18. Prepaid insurance
9. Allowance for doubtful accounts	19. Bond payable
10. Accounts receivable	20. Income tax payable

EASTWOOD COMPANY
Adjusted Trial Balance
December 31, 2017
	Debit	Credit
Cash	\(41,000
Accounts receivables	163,500
Allowance for doubtful account		\)8,700
Prepaid Insurance	5,900
Inventory	208,500
Equity Investment (long-term)	339,000
Land	85,000
Construction in the process (building)	124,000
Patent	36,000
Equipment	400,000
Accumulated depreciation 鈥� Equipment		240,000
Discount on bonds payable	20,000
Account payable		148,000
Accrued liabilities		49,200
Notes payable		94,000
Bond payable		200,000
Common stock		500,000
Paid-in-capital in Excess of par 鈥� Common stock		45,000
Retained earnings		138,000
Total	\(1,422,900	\)1,422,900

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Short Answer

Step by step solution

Definition of Accrued Liabilities

Classified Balance Sheet

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