Accounting help

Critical Thinking: Balance Sheet (50 points)

Lander Inc. had the following balance sheet at December 31, 2008:

During 2009 the following occurred.

1. Lander liquidated its available-for-sale investment portfolio at a loss of $6,500.

2. A tract of land was purchased for $31,000.

3. An additional $20,000 in common stock was issued at par.

4. Dividends totaling $5,000 were declared and paid to stockholders.

5. Net income for 2009 was $29,000, including $7,000 in depreciation expense.

6. Land was purchased through the issuance of $25,000 in additional bonds.

7. At December 31, 009, Cash was $72,650, Accounts Receivable was $35,250, and Accounts Payable was $32,500.

   1. Prepare a statement of cash flows for the year 2009 for Lander.

   2. Prepare the balance sheet as it would appear at December 31, 2009.

Week 4

Critical Thinking: Bad Debts (50 points)

Chatter Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Chatter’s Accounts Receivable account was $389,000 and the Allowance for Doubtful Accounts had a debit balance of $5,000. The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below:

1. What is the appropriate balance for the Allowance for Doubtful Accounts at year-end? 

2. Show how accounts receivable would be presented on the balance sheet.

3. What is the dollar effect of the year-end bad debt adjustment on the before-tax income?