Chapter 1 Problem 2-2
Problem 2-2
Simple Company
Statement of Financial Position
December 31, 2008
A S S E T S
Current assets: Note
Cash 420,000
Trading securities 250,000
Trade and other receivables (1) 620,000
Inventories (2) 1,250,000
Prepaid expenses (3) 20,000
Total current assets 2,560,000
Noncurrent assets:
Property, plant and equipment (4) 4,640,000
Long-term investments (5) 2,000,000
Intangible assets (6) 300,000
Total noncurrent assets 6,940,000
Total assets 9,500,000
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LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: Note
Trade and other payables (7) 620,000
Serial bonds payable - current portion 500,000
Total current liabilities 1,120,000
Noncurrent liabilities:
Serial bonds payable - remaining portion 2,000,000
Shareholders’ equity:
Share capital 5,000,000
Share premium 500,000
Retained earnings 880,000
Total shareholders’ equity 6,380,000
Total liabilities and shareholders’ equity 9,500,000
Note 1 - Trade and other receivables
Accounts receivable 500,000
Allowance for doubtful accounts ( 50,000)
Notes receivable 150,000
Claim receivable 20,000
Total 620,000
Note 2 - Inventories
Finished goods 400,000
Goods in process 600,000
Raw materials 200,000
Factory supplies 50,000
Total 1,250,000
Note 3 - Prepaid expenses
Prepaid insurance 20,000
Note 4 - Property, plant and equipment
Accum. Book
Cost depr. value
Land 1,500,000 - 1,500,000
Building 4,000,000 1,600,000 2,400,000
Machinery 2,000,000 1,300,000 700,000
Tools 40,000 - 40,000
Total 7,540,000 2,900,000 4,640,000
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Note 5 - Long-term investments
Investment in bonds 1,500,000
Plant expansion fund 500,000
Total 2,000,000
Note 6 - Intangible assets
Franchise 200,000
Goodwill 100,000
Total 300,000
Note 7 - Trade and other payables
Accounts payable 300,000
Notes payable 100,000
Income tax payable 60,000
Advances from customers 100,000
Accrued expenses 30,000
Accrued interest on note payable 10,000
Employees income tax payable 20,000
Total 620,000
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