Homework SourseThe following is the ending balances of accounts at December
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation.
Additional information:
The $154,000 balance in the land account consists of $117,000 for the cost of land where the plant and office buildings are located. The remaining $37,000 represents the cost of land being held for speculation.
The $78,000 in the marketable securities account represents an investment in the common stock of another corporation. Valley intends to sell one-half of the stock within the next year.
The notes payable account consists of a $134,000 note due in six months and a $201,000 note due in three annual installments of $67,000 each, with the first payment due in August of 2019.
Required:
Prepare a classified balance sheet for the Valley Pump Corporation at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
| Account Title | Debits | Credits | ||
| Cash | 42,000 | |||
| Accounts receivable | 90,000 | |||
| Inventories | 115,000 | |||
| Interest payable | 27,000 | |||
| Marketable securities | 78,000 | |||
| Land | 154,000 | |||
| Buildings | 385,000 | |||
| Accumulated depreciation—buildings | 117,000 | |||
| Equipment | 109,000 | |||
| Accumulated depreciation—equipment | 42,000 | |||
| Copyright (net of amortization) | 29,000 | |||
| Prepaid expenses (next 12 months) | 49,000 | |||
| Accounts payable | 82,000 | |||
| Deferred revenues (next 12 months) | 37,000 | |||
| Notes payable | 335,000 | |||
| Allowance for uncollectible accounts | 7,000 | |||
| Common stock | 370,000 | |||
| Retained earnings | 34,000 | |||
| Totals | 1,051,000 | 1,051,000 | ||
Solution
SOLUTION
VALLEY PUMP CORPORATION
Balance Sheet
At December 31, 2018
| Amount ($) | Amount ($) | |
| ASSETS: | ||
| Current assets: | ||
| Cash | 42,000 | |
| Marketable securities (78,000 /2) | 39,000 | |
| Accounts receivable, net of allowance for uncollectible accounts of $7,000 | 83,000 | |
| Inventories | 115,000 | |
| Prepaid expenses | 49,000 | |
| Total current assets | 328,000 | |
| Investments: | ||
| Marketable securities | 39,000 | |
| Land | 37,000 | |
| Total investments | 76,000 | |
| Property, plant, and equipment: | ||
| Land | 117,000 | |
| Buildings | 385,000 | |
| Equipment | 109,000 | |
| 611,000 | ||
| Less: Accumulated depreciation (117,000 + 42,000) | (159,000) | |
| Net property, plant, and equipment | 452,000 | |
| Intangible assets: | ||
| Copyright | 29,000 | |
| Total assets | 885,000 | |
| LIABILITIES AND SHAREHOLDER\'S EQUITY: | ||
| Current liabilities: | ||
| Accounts payable | 82,000 | |
| Interest payable | 27,000 | |
| Unearned revenues | 37,000 | |
| Note payable | 134,000 | |
| Current maturities of long-term debt | 67,000 | |
| Total current liabilities | 347,000 | |
| Long-term liabilities: | ||
| Note payable | 134,000 | |
| Shareholders’ equity: | ||
| Common stock | 370,000 | |
| Retained earnings | 34,000 | |
| Total shareholders’ equity | 404,000 | |
| Total liabilities and shareholders’ equity | 885,000 |
