THE FOLLOWING IS THE CHART OF ACCOUNTS FOR MICRODRIVE, INC. AT DEC. 31, 2016 AND
ID: 2340795 • Letter: T
Question
THE FOLLOWING IS THE CHART OF ACCOUNTS FOR MICRODRIVE, INC. AT DEC. 31, 2016 AND 2015 2015 2016 387,000 1,050,000 700,000 (1,375,000) 625,000 ACCOUNTS PAYABLE ACCOUNTS RECEIVABLE ACCRUED LIABILITIES 1,375,000 750,000 (1,875,000) 960,000 (125,000) 200,000 40,000 70,000 9,500,000 500,000 380,000 300,000 3,700,000 3,399,000 95,000 12,500,000 1,275,000 750,000 ACCUMULATED DEPRECIATION ADDITIONAL PAID-IN CAPITAL ALLOWANCE FOR BAD DEBTS CASH AND EQUIVALENTS COMMON STOCK ($2 PAR, 20,000 SH. o/S) 960,000 (100,000) 150,000 40,000 60,000 COMMON STOCK DIVIDENDS COST OF GOODS SOLD DEPRECIATION EXPENSE INCOME TAX EXPENSE 9,100,000 425,000 370,000 275,000 3,212,000 2,500,000 105,000 11,900,000 INTEREST EXPENSE INVENTORY LONG-TERM DEBT LONG-TERM INVESTMENTS NET SALES NOTES PAYABLE PAYROLL EXPENSE PREFERRED STOCK ($100 PAR, 2,000 SH. o/s) 375,000 200,000 9,000 50,000 700,000 200,000 9,000 38,000 PREFERRED STOCK DIVIDENDS PREPAID EXPENSES PROPERTY, PLANT, AND EQUIPMENT RETAINED EARNINGS SELLING AND ADMINISTRATIVE EXPENSES SHORT-TERM INVESTMENTS 6,625,000 2,871,000 500,000 75,000 4,375,000 2,380,000 475,000 87,000Explanation / Answer
Balance sheet is a statement of financial position of a firm till date. It includes assets, liabilities, and owners’ equity. The following equation must vsatisfy there:
Assets = Liabilities + Owners’ equity
In the books of M, Inc
Balance sheet
As at 31st December, 2015 and 2016
Assets
Liabilities & Owners’equity
Current assets:
2016, $
2015, $
Current liabilities:
2016, $
2015, $
Cash
200,000
150,000
Accounts payable
625,000
387,000
Accounts receivable
1375000
1050000
Accrued liabilities
750,000
700,000
Less: Allowance
125,000
100,000
Notes payable
1275000
375000
Net realizable value
1,250,000
950,000
Total current liabilities
2,650,000
1462000
Short-term invest
75,000
87,000
Long-term debt
3399000
2500000
Inventory
3700000
3212000
Prepaid expense
50,000
38,000
Total liabilities
6049000
3962000
Total current assets
5,275,000
4,437,000
Long-term invest
95,000
105,000
Owners’ Equity:
Equipment
6625000
4375000
Common stock
40,000
40,000
Less: Accu. Depr.
1875000
1375000
Additional paid-in-capital
960,000
960,000
Book value of Equip
4,750,000
3,000,000
Preferred-stock
200,000
200,000
Retained earnings
2871000
2380000
Total equity
4071000
3580000
Total assets
10120000
7542000
Total liab & equity
10120000
7542000
Note: The balance sheet tallied exactly. All the other figures should not be considered here.
Assets
Liabilities & Owners’equity
Current assets:
2016, $
2015, $
Current liabilities:
2016, $
2015, $
Cash
200,000
150,000
Accounts payable
625,000
387,000
Accounts receivable
1375000
1050000
Accrued liabilities
750,000
700,000
Less: Allowance
125,000
100,000
Notes payable
1275000
375000
Net realizable value
1,250,000
950,000
Total current liabilities
2,650,000
1462000
Short-term invest
75,000
87,000
Long-term debt
3399000
2500000
Inventory
3700000
3212000
Prepaid expense
50,000
38,000
Total liabilities
6049000
3962000
Total current assets
5,275,000
4,437,000
Long-term invest
95,000
105,000
Owners’ Equity:
Equipment
6625000
4375000
Common stock
40,000
40,000
Less: Accu. Depr.
1875000
1375000
Additional paid-in-capital
960,000
960,000
Book value of Equip
4,750,000
3,000,000
Preferred-stock
200,000
200,000
Retained earnings
2871000
2380000
Total equity
4071000
3580000
Total assets
10120000
7542000
Total liab & equity
10120000
7542000
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