accouting hw 2

(Corrections of a Balance Sheet)

The bookkeeper for Garfield Company has prepared the following balance sheet as of July 31, 2012.

The following additional information is provided.

1. Cash includes $1,200 in a petty cash fund and $12,290 in a bond sinking fund.

2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable–debit balances $46,580; (b) allowance for doubtful accounts $3,500.

3. Merchandise inventory costing $5,740 was shipped out on consignment on July 31, 2012. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,740 were recognized on these consigned goods.

4. Equipment had a cost of $112,000 and an accumulated depreciation balance of $28,000.

5. Taxes payable of $9,020 were accrued on July 31. Garfield Company, however, had set up a cash fund to meet this obligation. This cash fund was not included in the cash balance, but was offset against the taxes payable amount.

Prepare a corrected classified balance sheet as of July 31, 2012, from the available information, adjusting the account balances using the additional information. (List current liabilities from largest to smallest amounts, e.g. 10, 5, 2.)

(Current Assets Section of the Balance Sheet)

Presented below are selected accounts of Aramis Company at December 31, 2012.

The following additional information is available.

1. Inventories are valued at lower of cost or market using LIFO.

2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is $50,600.

3. The short-term investments have a fair value of $29,000. (Assume they are trading securities.)

4. The notes receivable are due April 30, 2014, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2012.)

5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of $50,000 are pledged as collateral on a bank loan.

6. Licenses are recorded net of accumulated amortization of $14,000.

7. Treasury stock is recorded at cost.

Prepare the current assets section of Aramis Company's December 31, 2012, balance sheet, with appropriate disclosures. (List current assets in order of liquidity.)

(Current vs. Long-term Liabilities)

Pascal Corporation is preparing its December 31, 2012, balance sheet. The following items may be reported as either a current or long-term liability.

1. On December 15, 2012, Pascal declared a cash dividend of $4.64 per share to stockholders of record on December 31. The dividend is payable on January 15, 2013. Pascal has issued 1,000,000 shares of common stock, of which 50,000 shares are held in treasury.

2. At December 31, bonds payable of $102,895,000 are outstanding. The bonds pay 12% interest every September 30 and mature in installments of $26,247,000 every September 30, beginning September 30, 2013.

3. At December 31, 2011, customer advances were $13,659,000. During 2012, Pascal collected $30,549,000 of customer advances, and advances of $26,248,000 were earned.

For each item above indicate the dollar amounts to be reported as a current liability and as a long-term liability. (For item #2, list the bonds payable with the smallest amount first.)

(Current Assets and Current Liabilities)

The current assets and liabilities sections of the balance sheet of Agincourt Company appear as follows.

The following errors in the corporation's accounting have been discovered:

1. January 2013 cash disbursements entered as of December 2012 included payments of accounts payable in the amount of $39,500, on which a cash discount of 2% was taken.

2. The inventory included $27,000 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $12,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.

3. Sales for the first four days in January 2013 in the amount of $30,000 were entered in the sales book as of December 31, 2012. Of these, $21,500 were sales on account and the remainder were cash sales.

4. Cash, not including cash sales, collected in January 2013 and entered as of December 31, 2012, totaled $36,032. Of this amount, $24,892 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.

(Current Liabilities)

Mary Smith is the controller of Arnold Corporation and is responsible for the preparation of the year-end financial statements. The following transactions occurred during the year.

For each item above, indicate the dollar amount to be reported as a current liability. If a liability is not reported, enter 0.

(Preparation of a Balance Sheet)

Presented below is the trial balance of Vivaldi Corporation at December 31, 2012.

Prepare a balance sheet at December 31, 2012, for Vivaldi Corporation. Ignore income taxes. (List liabilities, long-term investments, and intangible assets from largest to smallest amounts, e.g. 10, 5, 3.)