Concept explainers
Balance sheet preparation
• LO3–2, LO3–3
The following is the balance sheet of Korver Supply Company at December 31, 2017.
KORVER SUPPLY COMPANY
Balance Sheet
At December 31, 2 017
Assets
Cash | $120,000 |
Accounts receivable | 300,000 |
Inventories | 200,000 |
Furniture and fixtures, net | 150,000 |
Total assets | $770,000 |
Liabilities and Shareholders’ Equity
Accounts payable (for merchandise) | $190,000 |
Note payable | 200,000 |
Interest payable | 6,000 |
Common stock | 100,000 |
274,000 | |
Total liabilities and shareholders’ equity | $770,000 |
Transactions during 2018 were as follows:
1. Sales to customers on account $800,000
2. Cash collected from customers 780,000
3. Purchase of merchandise on account 550,000
4. Cash payment to suppliers 560,000
5. Cost of merchandise sold 500,000
6. Cash paid for operating expenses 160,000
7. Cash paid for interest on note 12,000
The note payable is dated June 30, 2017 and is due on June 30, 2019. Interest at 6% is payable annually on June 30. Depreciation on the furniture and fixtures for the year is $20,000. The furniture and fixtures originally cost $300,000.
Required:
Prepare a classified balance sheet at December 31, 2018 (ignore income taxes).
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
Intermediate Accounting
- the nearest percent. Which company has the most seasonal business? Briefly explain. Which company is Toys "R" Us? The Gillette Company? Briefly explain. c. d. SERIAL PROBLEM:KATE'S CARDS Kate is very pleased with the results of the first year of operations for Kate's Cards. She ended the year on a high note, with the company's reputation for producing quality cards leading to more basi- ness than she can currently manage. Kate is considering expanding and bringing in several employ- ees. In order to do this, she will need to find a larger location and also purchase more equipment. All this means additional financing. Kate has asked you to look at her year-end financial statements as if you were a banker considering giving Kate a loan. Comment on your findings and provide calcula- tions to support your comments. (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapter 1 through Chapter 12.) SP13. KATE'S CARDS Income Statement Year Ended August 31, 2019 $185,000…arrow_forwardPC 35 A Comparative Balance Sheet 2018 2017 Current Assets Cash $94,300 $21,500 Accts Receivable 14,700 21,400 Merchandise Inventory 62,200 59,200 Current Liabilities Accounts Payable 31,600 29,100 Accrued Liabilities 11,200 11,500 2018 transactions Payment of cash dividends $18,200 Purchase of equipment with cash 54,800 Issuance of long-term notes payable to borrow cash 44,000 Issuance of common stock for cash 113,000 Depreciation expense…arrow_forwardQUESTION 6 E18.7 E18.7 (LO 3) Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2020 are presented below. Compute liquidity ratios. End of Year Beginning of Year Cash and cash equivalents $ 795 $ 72 Accounts receivable (net) 2,035 1,942 Inventory 898 900 Other current assets 326 303 Total current assets $4,054 $3,217 Total current liabilities $2,014 $1,601 For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash provided by operating activities was $1,251 million. Instructions Compute the current ratio, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year.arrow_forward
- rq a Problem 11-12 (Algo) Effect of transactions on liquidity measures LO 1 Selected balance sheet accounts for Tibbetts Company on September 30, 2019, are as follows: Cash $ 48,000 Marketable securities 135,000 Accounts receivable, net 165,000 Inventory 187,500 Prepaid expenses 21,000 Total current assets $ 556,500 Accounts payable $ 108,000 Other accrued liabilities 26,400 Short-term debt 48,000 Total current liabilities $ 182,400 Required: Calculate the working capital, current ratio, and acid-test ratio for Tibbetts Company as of September 30, 2019. Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2020. Prepare journal entries for the below transactions and Indicate the effect of each item on Tibbetts Company's working capital, current ratio, and acid-test ratio. Use + for increase, − for decrease, and (NE) for no effect. Credit sales for the year…arrow_forwardq. 13 A company has $628 in inventory, $1,921 in net fixed assets, $300 in accounts receivable, $141 in cash, and $354 in accounts payable. What are the company’s total current assets? $769 $1,069 $2,990 $1,123 $1,423arrow_forwardQuestion 13 Using the following balance sheet items and amounts, calculate the total liquid assets. • Money market account $4056 • Retirement account $17200 • Medical bills $120 • Checking account $8308 • Credit card balance $670 Your Answer: Answerarrow_forward
- Resul X HCS/X What X SAAM X 18851 HCS380 Week 4 Horizontal and Vertical Analysis ::- % 5 Cove X G how X Hosp X G beau x + DIRECTIONS: Using these data from Rollaird Company's comparative balance sheets, perform a horizontal analysis. Use Ch. 13, "Financial Analysis: The Big Picture," as guidance. Dec. 31, 2022 Dec. 31, 2021 Accounts Receivable 460,000 400,000 Inventory 780,000 650,000 Total Assets 3,164,000 2,800,000 NOTE: When entering your numbers, use whole numbers in the equation, and 1 decimal point for the answer, as seen in the example below. The text box will highlight red if incorrect after clicking the Submit button (bottom right corner). Example: 30000 ÷ 500000 = 6.0 % Inventory Bi F6 6 *4" & 7 F8 ** 8 F9 F10 ( 9 DOD F11 ) 0 = I % 54°F Mostly clear DA 888 Home End Insert = F12 10:05 5/23/arrow_forwardPROBLEM NO. 10 A portion of the SPARK COMPANY's statement of financial position appears as follows: December 31, 2017 December 31, 2016 Assets: Cash Notes receivable Inventory Liabilities: Accounts payable 75,000 Spark Company pays for all operating expenses with cash and purchases all inventory on cred During 2017, cash totaling P471,700 was paid on accounts payable. Operating expenses for 20 totaled P220,000. All sales are cash sales. The inventory was restocked by purchasing 1,5 units per month and valued by using periodic FIFO. The unit cost of inventory was P32.60 dur January 2017 and increased P0.10 per month during the year. Spark selis only one product. sales are made for P50 per unit. The ending invertory for 2016 was valued at P32.50 per uni 3 Based on the preceding information, compute the following: 46. Number of units sold during 2017 A. 7,066 B. 18,400 47. Accounts payable balance at December 31, 2017 A. P190,100 B. P50,000 48. Inventory quantity on December 31, 2017 A.…arrow_forwardaity LO P3 Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Current Yr 1 Yr Ago 2 Yrs Ago 29,993 $ 51,438 69,358 7,952 216,168 32,192 25,146 76,598 94,437 8,263 230,450 2$ 41,661 44,817 3,437 196,693 Total assets $ 434,894 $ 374,909 $ 318,800 Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earings $ 107,206 2$ 62,726 $ 42,502 83,395 162,500 81,793 87,091 162,500 62,592 71,159 162,500 42,639 Total liabilities and equity $ 434,894 $ 374,909 $ 318,800 (1-a) Compute the current ratio for each of the three years. (1-b) Did the current ratio improve or worsen over the three year period? (2-a) Compute the acid-test ratio for each of the three years. (2-b) Did the acid-test ratio improve or worsen over the three year period? Complete this question by entering your answers in the tabs below. Required…arrow_forward
- Extracts from the balance sheet ( 000,000 ) of A Co. as follows: Current Assets Merchandise Inventory P 77.1 Accounts Receivable 50.1 Cash on Hand and in 85.0 Creditors: Amounts falling due within one year 70.2 Bank Overdraft Other Creditors 147.0 What is the current ratio and the acid test ratio of the co.? Current ratio Acid test ratio a. .96 .38 b. .96 .36 c. .98 .61 d. .98 .62arrow_forward(1) Compute days' sales uncollected. Days' Sales Uncollected Choose Numerator: | Choose Denominator: Days Days' Sales Uncollected 365 Days' Sales Uncollected X 2017: 0 days 2016: 0 days (4) Compute days' sales in inventory. Days' Sales In Inventory. Choose Numerator: Choose Denominator: Days Days' Sales In Inventory %3D 365 Days' sales in inventory 2017: 0 days 2016: 0 days %D II II II II IIarrow_forwardExercise 6-15 (Algo) Liquid assets and accounts receivable LO A1 Barga Company's net sales for Year 1 and Year 2 are $665,000 and $749,000, respectively. Its year-end balances of accounts receivable follow: Year 1, $64,000; and Year 2, $91,000. a. Complete the below table to calculate the days' sales uncollected at the end of each year. Note: Do not round intermediate calculations. Round your "Days' Sales Uncollected" answers to 1 decimal place. Year 1: Year 2: Choose Numerator: Accounts receivable $ $ Days' Sales Uncollected 1 Choose Denominator: X 1 60,000 1 94,000 / 1 X X X Days 365 365 365 = = = Days' Sales Uncollected Days' sales uncollected 31.3 days daysarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education