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P5-4 (L03) GROUPWORK (Preparation of a Corrected Balance Sheet) The balance sheet of Kishwaukee Corporation as of December 31, 2017, is as follows.

KISHWAUKEE CORPORATION
Balance Sheet
December 31, 2017
Assets
Goodwill (Note 2)	\(120,000
Building (Note 1)	1,640,000
Inventory	312,100
Land	950,000
Accounts receivable	170,000
Treasury Stock (50,000 shares)	87,000
Cash on hand	175,900
Assets allocated to trustee for plant expansion
Cash in bank	70,000
Debt investment (held to maturity)	138,000
	\)3,663,000
Equities
Note payable (Note 3)	\(600,000
Common stock authorized and issue, 1,000,000 shares no par	1,150,000
Retained earnings	103,000
Non-controlling Interest	55,000
Appreciation capital (Note 1)	570,000
Income tax payable	75,000
Reserve for depreciation recorded to the date of building	410,000
	\)3,663,000

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

Step by step solution

01

Definition of Restricted Cash

The cash balance held by the business entity that cannot be used in general business activities as it is held for some special purpose is known as restricted cash.

02

Classified Balance Sheet

KISHWAUKEE CORPORATION
Balance Sheet
December 31, 2017
Assets
Current assets
Cash on hand		$175,900
Restricted cash in bank		70,000
Inventory		312,100
Accounts receivable		170,000
Long-Term investments
Debt investment (held to maturity)		138,000
Property, Plant, and Equipment
Land		950,000
Building		1,640,000
Intangible assets
Goodwill		120,000
Total assets		3,576,000
Liabilities
Current liabilities
Income tax payable		75,000
Note payable		100,000
Non-current liabilities
Note payable		500,000
Equities
Common stock authorized and issued, 1,000,000 shares no par	1,150,000
Less: Treasury Stock (50,000 shares)	(87,000)	1,063,000
Non-controlling Interest		55,000
Reserve and surplus
Retained earnings		803,000
Appreciation capital		570,000
Reserve for depreciation recorded to the date of building		410,000
Total liabilities and equity		$3,576,000

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