Chapter 2: 15BP (page 51)

Arrange the following items in proper balance sheet presentation:
Accumulated depreciation
$309,000
Retained earnings
187,000
Cash
14,000
Bonds payable
136,000
Accounts receivable
54,000
Plant and equipment – original cost
775,000
Accounts payable
35,000
Allowance for bad debts
9,000
Common stock, $1 par, 100,000 share outstanding
100,000
Inventory
70,000
Preferred stock, $59 par, 1,000 share outstanding
59,000
Marketable securities
24,000
Investments
20,000
Notes payable
34,000
Capital paid in excess of par (common stock)
88,000

Short Answer

Expert verified

Common stock, preferred, capital paid in excess of par, and retained earnings are considered the equity and shown as the shareholder funds. The accounts payable, bonds payable, and notes payable are treated as liability and classified as a current liability. The cash, account receivable, inventory, and marketable securities are treated as the current assets, and the plant and machinery are considered the fixed asset of the company.

Step by step solution

Retained earnings

Retained earnings refer to the portion of the net income of a company that is held and saved by an organization for future investment and further growth opportunities.

Presentation of the balance sheet

Particulars	Amount ($)
Equity and liabilities
Shareholder’s funds:
Share capital Common stock ($100,000+$88,000) Preferred stock	188,000 59,000
Reserve and surplus (retained earnings)	187,000

Non-current liabilities
Bonds payable	136,000

Current liabilities
Accounts payable	35,000
Notes payable	34,000
Total	639,000

Assets:
Non-current assets:
Fixed assets $775,000 Less: Depreciation $309,000	466,000
Investments	20,000

Current assets:
Current investment (marketable securities)	24,000
Inventories	70,000
Accounts receivable $54,000 Less: allowance for bad debts $9,000	45,000
Cash and cash equivalent	14,000

Total	639,000

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Times mirror and glass company
Sales	\)126,000
Less: Cost of goods sold	93,000
Gross profit	\(33,000
Less: selling and administrative expenses	11,000
Lease Expenses	4,000
Operating profit*	\)18,000
Less: Interest expenses	3,000
Earning before taxes	\(15,000
Less: Taxes (30%)	4,500
Earning after taxes	\)10,500

Short Answer

Step by step solution

Retained earnings

Presentation of the balance sheet

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Intermediate Accounting

Business Case Studies

Financial Performance

Strategic Direction

Managerial Economics

Nature of Business

Study anywhere. Anytime. Across all devices.

Accumulated depreciation	\(309,000
Retained earnings	187,000
Cash	14,000
Bonds payable	136,000
Accounts receivable	54,000
Plant and equipment – original cost	775,000
Accounts payable	35,000
Allowance for bad debts	9,000
Common stock, \)1 par, 100,000 share outstanding	100,000
Inventory	70,000
Preferred stock, $59 par, 1,000 share outstanding	59,000
Marketable securities	24,000
Investments	20,000
Notes payable	34,000
Capital paid in excess of par (common stock)	88,000