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Chapter 5: Question 10Q (page 237)
In its December 31, 2017, balance sheet Oakley Corporation reported as an asset, “Net notes and accounts receivable, $7,100,000.” What other disclosures are necessary?
The business entity must report the amount of both notes and accounts receivables separately.
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What is the purpose of a free cash flow analysis?
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.
What is the purpose of a statement of cash flows? How does it differ from a balance sheet and an income statement?
E5-9 (L02,3) (Current Assets and Current Liabilities) The current assets and current liabilities sections of the balance sheet of Allessandro Scarlatti Company appear as follows.
ALLESSANDRO SCARLATTI COMPANY | ||||
BALANCE SHEET PARTIAL | ||||
December 31, 2017 | ||||
Cash | \(40,000 | Account payable | \)61,000 | |
Accounts receivables | \(89,000 | Note payable | 67,000 | |
Less: Allowance for doubtful accounts | (7,000) | 82,000 | \)128,000 | |
Inventory | 171,000 | |||
Prepaid expenses | 9,000 | |||
\(302,000 |
The following errors in the corporation’s accounting have been discovered:
1. January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of \)39,000, on which a cash discount of 2% was taken.
2. The inventory included \(27,000 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, \)12,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
3. Sales for the first four days in January 2018 in the amount of \(30,000 were entered in the sales journal as of December 31, 2017. Of these, \)21,500 were sales on account and the remainder were cash sales.
4. Cash, not including cash sales, collected in January 2018 and entered as of December 31, 2017, totaled \(35,324. Of this amount, \)23,324 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.
Instructions
(a) Restate the current assets and current liabilities sections of the balance sheet in accordance with good accounting practice. (Assume that both accounts receivable and accounts payable are recorded gross.)
(b) State the net effect of your adjustments on Allessandro Scarlatti Company’s retained earnings balance.
IFRS5-2 Briefly describe some of the similarities and differences between GAAP and IFRS with respect to statement of financial position (balance sheet) reporting.
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