P 37 Balance sheet preparation The following balance sheet f

P 3-7 Balance sheet preparation The following balance sheet for the Hubbard Corporation was prepared by the company HUBBARD CORPORATION Balance Sheet At December 31, 2018 Assets errors L03-2,L03-3 Buildings Land Cash Accounts receivable (net) Inventories Machinery Patent (net) Investment in marketable equity securities s 750,000 250,000 60,000 120,000 240,000 280,000 100,000 60,000 $1,860,000 Total assets Liabilities and Shareholders\' Equity Accounts payable Accumulated depreciation Notes payable Appreciation of inventories Common stock, authorized and issued 100,000 shars of no par stock Retained earnings $ 215,000 255,000 500,000 80,000 430,000 380,000 $1,860,000o Total liabilities and shareholders\' equity 2 SECTION 1 The Role of Accounting as an Information System Additional Information: 1. The buildings, land, and machinery are all stated at cost except for a parcel of land that the company is hold- ing for future sale. The land originally cost $50,000 but, due to a significant increase in market value, is listed at $120,000. The increase in the land account was credited to retained carnings. 2. Marketable equity securities consist of stocks of other corporations and are recorded at cost, $20,000 of which will be sold in the coming year. The remainder will be held indefinitely 3. Notes payable are all long-term. However, a $100,000 note requires an installment payment of $25.000 due in the coming year 4. Inventories are recorded at current resale value. The original cost of the inventories is S160,000. Required: Prepare a corrected classified balance sheet for the Hubbard Corporation at December 31, 201s

Solution

BALANCE SHEET ASSETS Current assets: Cash 60000 Marketable securities 20000 Accounts receivable (net) 120000 Inventories 160000 Total current assets 360000 Investments: Marketable securities 40000 Land held for sale 50000 Total investments 90000 Property, Plant and Equipment: Land (250000-120000) 130000 Buildings 750000 Machinery 280000 1160000 Less: Accumulated depreciation 255000 Net Property, Plant and Equipment 905000 Intangible assets: Patents 100000 TOTAL ASSETS 1455000 LIABILITIES AND SHAREHOLDERS\' EQUITY Current liabilities: Accounts payable 215000 Current maturities of LT debt 25000 Total current liabilities 240000 Long term liabilities: Notes payable (500000-25000) 475000 Shareholders equity: Common stock, no par value, 100000 shares , authorized and issued 430000 Retained earnings (380000-70000) 310000 Total shareholders\' equity 740000 TOTAL LIABILITIES AND SHAREHOLDERS\' EQUITY 1455000