Problem 3-3 Balance sheet preparation [LO3-2, 3-3] The following is a December 3

Question

Problem 3-3 Balance sheet preparation [LO3-2, 3-3]

The following is a December 31, 2018, post-closing trial balance for Almway Corporation.

Credits

Additional information:

1. The investment account includes an investment in common stock of another corporation of $46,000 which management intends to hold for at least three years. The balance of these investments is intended to be sold in the coming year.

2. The land account includes land which cost $41,000 that the company has not used and is currently listed for sale.

3. The cash account includes $31,000 restricted in a fund to pay bonds payable that mature in 2021 and $39,000 set aside in a three-month Treasury bill.

4. The notes payable account consists of the following: a. a $46,000 note due in six months. b. a $66,000 note due in six years. c. a $66,000 note due in five annual installments of $13,200 each, with the next installment due February 15, 2019.

5. The $76,000 balance in accounts receivable is net of an allowance for uncollectible accounts of $6,000.

6. The common stock account represents 116,000 shares of no par value common stock issued and outstanding. The corporation has 300,000 shares authorized.

Required: Prepare a classified balance sheet for the Almway Corporation at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

Account Title Debits

Credits

Cash 77,000 Investments 142,000 Accounts Receivable 76,000 Investments 216,000 Prepaid insurance (for the next 9 Months) 6,000 Land 122,000 Buildings 436,000 Accumulated Depreciation-Buildings 116,000 Equipment 126,000 Accumulated Depreciation-Equipment 76,000 Patents (net of amortization) 26,000 Accounts Payable 107,000 Notes Payable 178,000 Interest Payable 36,000 Bonds Payable 256,000 Common Stock 348,000 Retained Earnings 110,000 Totals 1,227,000 1,227,000

Explanation / Answer

Classified balance sheet for the Almway Corporation at December 31, 2018

ASSETS Amount ($) Amount ($) Current Assets: Cash and cash equivalents
(77000-31000) 46000 Short Term Investments
(142000-46000) 96000 Accounts receivable,net of allowance for uncollectible accounts of $6000 76000 Inventories 216000 Prepaid Insurance 6000 Total Current Assets 440000 Investments: Marketable Securities 46000 Land held for sale 41000 Restricted Cash 31000 Total Investments 118000 Property,Plant and equipment assets: Land (122000-41000) 81000 Buildings 436000 Less: Accumulated depreciation -116000 Equipment 126000 Less: Accumulated depreciation -76000 Net Property,plant and equipment 451000 Intangible Assets: Patent 26000 Total Assets 1035000 LIABILITIES AND STOCKHOLDER'S EQUITY Current Liabilities: Accounts Payable 107000 Interest Payable 36000 Notes payable 46000 Current maturities of long term debt 13200 Total Current Liabilities 202200 Long Term Liabilities: Notes Payable
(66000+66000-13200) 118800 Bonds Payable 256000 Total Long Term Liabilities 374800 Stock Holder's Equity Common stock, no par value;300,000 shares authorized;116,000 issued and outstanding 348000 Retained earnings 110000 Total Stockholders equity 458000 Total liabilities and stockholders' equity 1035000

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