The following is the ending balances of accounts at December 31, 2018 for the Va

Question

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

Explanation / Answer

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

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