Exercise 5-5 Uhura Company has decided to expand its operations. The bookkeeper
ID: 2771485 • Letter: E
Question
Exercise 5-5
Uhura Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below in order to obtain additional funds for expansion.
UHURA COMPANY
BALANCE SHEET
FOR THE YEAR ENDED 2014
Current assets
Cash $230,000
Accounts receivable (net) 340,000
Inventory (lower-of-average-cost-or-market) 401,000
Equity investments (trading)-at cost (fair value $120,000) 140,000
Property, plant, and equipment
Buildings (net) 570,000
Equipment (net) 160,000
Land held for future use 175,000
Intangible assets
Goodwill 80,000
Cash surrender value of life insurance 90,000
Prepaid expenses 12,000
Current liabilities
Accounts payable 135,000
Notes payable (due next year) 125,000
Pension obligation 82,000
Rent payable 49,000
Premium on bonds payable 53,000
Long-term liabilities
Bonds payable 500,000
Stockholders’ equity
Common stock, $1.00 par, authorized 400,000 shares, issued 290,000 290,000
Additional paid-in capital 160,000
Retained earnings ?
Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $160,000 and for the equipment, $105,000. The allowance for doubtful accounts has a balance of $17,000. The pension obligation is considered a long-term liability. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Buildings and Equipment. Enter account name only and do not provide the descriptive information provided in the question.)
Uhura Company
Balance Sheet
December 31, 2014
Assets
$
$
:
$
$
:
:
$
Liabilities and Stockholders' Equity
$
$
$
:
$
$
Explanation / Answer
UHURA COMPANY
BALANCE SHEET FOR THE YEAR ENDED 31.12.2014
PARTICULARS
AMOUNT
AMOUNT
ASSETS
Current Assets
Inventory
401000
Accounts Receivable
Less: Provision for doubtful debts
357000
17000
340000
Cash
230000
Equity Investment
140000
Cash Surrender Value Of Life Insurance
90000
Prepaid Expenses
12000
Fixed Assets
Tangible Assets
Building (Gross)
Less: Accumulated Depreciation
730000
160000
570000
Equipment(Gross)
Less: Accumulated Depreciation
265000
105000
160000
Land held for future use
175000
Intangible Assets
Goodwill
80000
TOTAL ASSETS
2198000
Liabilities & Stockholder Equity
Current Liabilities
Accounts Payable
135000
Notes Payable
125000
Rent Payable
49000
Long Term Liabilities
Bonds Payable
500000
Pension Obligation
82000
Premium On Bonds Payable
53000
Stockholder Equity
Common Stock
290000
Additional paid in capital
160000
Retained Earnings (Balancing Figure)
804000
TOTAL LIABILITES
2198000
In our problem we have been given net building, net equipment and net debtors which already include the effect of depreciation/allowance.
Hence to arrive at their gross value we simply add up the net values with the respective accumulated depreciation/allowance
PARTICULARS
AMOUNT
AMOUNT
ASSETS
Current Assets
Inventory
401000
Accounts Receivable
Less: Provision for doubtful debts
357000
17000
340000
Cash
230000
Equity Investment
140000
Cash Surrender Value Of Life Insurance
90000
Prepaid Expenses
12000
Fixed Assets
Tangible Assets
Building (Gross)
Less: Accumulated Depreciation
730000
160000
570000
Equipment(Gross)
Less: Accumulated Depreciation
265000
105000
160000
Land held for future use
175000
Intangible Assets
Goodwill
80000
TOTAL ASSETS
2198000
Liabilities & Stockholder Equity
Current Liabilities
Accounts Payable
135000
Notes Payable
125000
Rent Payable
49000
Long Term Liabilities
Bonds Payable
500000
Pension Obligation
82000
Premium On Bonds Payable
53000
Stockholder Equity
Common Stock
290000
Additional paid in capital
160000
Retained Earnings (Balancing Figure)
804000
TOTAL LIABILITES
2198000