ACC 421 Week 3 WileyPlus Assignment - Exercises

ACC421 Week 3 E5-5 E5-12 E5-15 E24-2 E24-4

E5-5 (Preparation of a Corrected Balance Sheet) Bruno Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented on the next page in order to obtain additional funds for expansion.

BRUNO COMPANY
BALANCE SHEET
DECEMBER 31, 2010
Current assets 
Cash $260,000
Accounts receivable (net) 340,000
Inventories at lower of average cost or market 401,000
Trading securities—at cost (fair value $120,000) 140,000
Property, plant, and equipment 
Building (net) 570,000
Office equipment (net) 160,000
Land held for future use 175,000
Intangible assets 
Goodwill 80,000

and so on ...

Instructions
Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $160,000 and for the office equipment, $105,000. The allowance for doubtful accounts has a balance of $17,000. The pension obligation is considered a long-term liability.

E5-12 (Preparation of a Balance Sheet) Presented below is the trial balance of Vivaldi Corporation at December 31, 2010. 

Debits Credits
Cash $ 197,000 
Sales $ 7,900,000
Trading Securities (at cost, $145,000) 153,000 
Cost of Goods Sold 4,800,000 
Long-term Investments in Bonds 299,000 
Long-term Investments in Stocks 277,000 
Short-term Notes Payable 90,000
Accounts Payable 455,000
Selling Expenses 2,000,000 
Investment Revenue 63,000
Land 260,000 
Buildings 1,040,000 
and so on ....

Instructions
Prepare a balance sheet at December 31, 2010, for Vivaldi Corporation. Ignore income taxes.

E5-15 (Preparation of a Statement of Cash Flows) Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31. 

2010 2009
Cash $157,000 $ 78,000 
Accounts receivable 180,000 185,000 
Investments 52,000 74,000 
Equipment 298,000 240,000 
Less: Accumulated depreciation (106,000) (89,000)
Current liabilities 134,000 151,000 
Capital stock 160,000 160,000 
Retained earnings 287,000 177,000

Additional information:

Investments were sold at a loss (not extraordinary) of $7,000; no equipment was sold; cash dividends paid were $50,000; and net income was $160,000.

Instructions
(a) Prepare a statement of cash flows for 2010 for Sondergaard Corporation.

(b) Determine Sondergaard Corporation's free cash flow.

E24-2 (Post-Balance-Sheet Events) For each of the following subsequent (post-balance-sheet) events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose.

1. _________ Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end.

2. _________ Introduction of a new product line.

3. _________ Loss of assembly plant due to fire.

4. _________ Sale of a significant portion of the company's assets.

and so on ....

E24-4 (Ratio Computation and Analysis; Liquidity) As loan analyst for Madison Bank, you have been presented the following information. 

Plunkett Co. Herring Co.
Assets 
Cash $ 120,000 $ 320,000
Receivables 220,000 302,000
Inventories 570,000 518,000
Total current assets 910,000 1,140,000
Other assets 500,000 612,000