The following statement of financial position was prepared by Peter Quill, bookk
ID: 2610511 • Letter: T
Question
The following statement of financial position was prepared by Peter Quill, bookkeeper for Nova Corp.at December 31, 2018.
Nova Corp.
Statement of Financial Position
December 31, 2018
Cash $ 90,000 Accounts payable $ 75,000
Accounts receivable (net)
52,200
Long-term liabilities
110,000
Inventories
57,000
Shareholders’ equity
208,500
Investments
76,300
Equipment (net)
86,000
Patents
32,000
$393,500 $393,500
The following additional information is provided:
- “Cash” includes prepaid insurance of $9,400; as well, a bank overdraft of $1,500 has been deducted.
- The net accounts receivable balance includes:
a. accounts receivable—debit balances $62,000;
b. accounts receivable—credit balances $5,000;
c. allowance for doubtful accounts $4,800.
- Inventories do not include goods costing $5,000 shipped out on consignment. Receivables of $5,000 were recorded on these goods.
- Investments include investments in common shares, trading $24,000 and long-term $43,300, and franchises $9,000.
- Equipment costing $8,000 with accumulated depreciation $6,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
Required
1. Prepare a statement of financial position in good form (shareholders’ equity details can be omitted.)
Accounts receivable (net)
52,200
Long-term liabilities
110,000
Inventories
57,000
Shareholders’ equity
208,500
Investments
76,300
Equipment (net)
86,000
Patents
32,000
Explanation / Answer
ASSETS Investments: Available for sale securities 43300 Property, plant and equipment: Equipment (86000+46000-8000) 124000 Less: Acccumulated depreciation 40000 84000 Intangible assets: Patents 32000 Franchises 9000 41000 Current Assets: Equipment held for sale (8000-6000) 2000 Inventories (57000+5000) 62000 Accounts receivable (62000-5000) 57000 Less: Allowance for doubtful accounts 4800 52200 Trading securities 24000 Prepaid insurance 9400 Cash (90000-9400+1500) 82100 Total current assets 231700 Total assets 400000 EQUITY AND LIABILITIES Shareholders' equity 208500 Non-current liabilities 110000 Current liabilities: Accounts payable (75000+5000) 80000 Bank overdraft 1500 Total current liabilities 81500 Total liabilities 191500 Total liabilities and shareholders' equity 400000