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Chapter 5: 1 (page 237)
How does information from the balance sheet help users of the financial statements?
Financial capacity and financial flexibility can be determined using the company’s balance sheet.
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EXCEL (Balance Sheet Preparation) Presented below are a number of balance sheet items for Montoya, Inc., for the current year, 2017.
Goodwill | \(125,000 | Accumulated depreciation - equipment | \)292,000 |
Payroll tax payable | 177,591 | Inventory | 239,800 |
Bond payable | 300,000 | Rent payable (short-term) | 45,000 |
Discount on bond payable | 15,000 | Income tax payable | 98,362 |
Cash | 360,000 | Rent payable (long-term) | 480,000 |
Land | 480,000 | Common stock, \(1 par value | 200,000 |
Notes receivable | 445,700 | Preferred stock, \)10 par value | 150,000 |
Note payable | 265,000 | Prepaid expenses | 87,920 |
Account payable | 490,000 | Equipment | 1,470,000 |
Retained earnings | Debt investment (trading) | 121,000 | |
Income tax receivable | 97,630 | Accumulated depreciation – building | 270,200 |
Note payable (Long-term) | 1,600,000 | Buildings | 1,640,000 |
Instructions
Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term unless stated otherwise. The cost and fair value of equity investments (trading) are the same.
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 \(145,000) | 153,000 | |
Cost of goods sold | 4,800,000 | |
Debt investment (long-term) | 299,000 | |
Equity Investment (long-term) | 277,000 | |
Notes payable (Short-term) | 90,000 | |
Account payable | 455,000 | |
Selling expenses | 2,000,000 | |
Investment revenue | 63,000 | |
Land | 260,000 | |
Buildings | 1,040,000 | |
Dividend payable | 136,000 | |
Accrued Liabilities | 96,000 | |
Accounts Receivable | 435,000 | |
Accumulated depreciation – Building | 152,000 | |
Allowance for doubtful accounts | 25,000 | |
Administrative expenses | 900,000 | |
Interest expenses | 211,000 | |
Inventory | 597,000 | |
Gain | 80,000 | |
Notes payable | 900,000 | |
Equipment | 600,000 | |
Bonds payable | 1,000,000 | |
Accumulated depreciation – Equipment | 60,000 | |
Franchises | 160,000 | |
Common stock | 1,000,000 | |
Treasury stock | 191,000 | |
Patents | 195,000 | |
Retained Earnings | 78,000 | |
Paid-in-capital in excess of par | 80,0000 | |
Total | \)12,315,000 | $12,315,000 |
Instructions Prepare a balance sheet at December 31, 2017, for Scott Butler Corporation. (Ignore income taxes.)
2. Current assets under IFRS are listed generally:
(a) by importance.
(b) in the reverse order of their expected conversion to cash.
(c) by longevity.
(d) alphabetically.
Use the information presented in BE5-14 for Martinez Corporation to compute the net cash used (provided) by financing activities.
BE5-14 (L05) Martinez Corporation engaged in the following cash transactions during 2017.
Sale of land and building $191,000
Purchase of treasury stock 40,000
Purchase of land 37,000
Payment of cash dividend 95,000
Purchase of equipment 53,000
Issuance of common stock 147,000
Retirement of bonds 100,000
Compute the net cash provided (used) by investing activities.
What is the purpose of a statement of cash flows? How does it differ from a balance sheet and an income statement?
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