Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 2-4
Relax Company
Statement of Financial Position
December 31, 2008
A S S E T S
Current assets: Note
Cash 400,000
Trade accounts receivable (1) 750,000
Inventories 1,000,000
Prepaid expenses 100,000
Total current assets 2,250,000
Noncurrent assets:
Property, plant and equipment (2) 5,600,000
Investment in associate 1,300,000
Intangible assets (3) 350,000
Total noncurrent assets 7,250,000
Total assets 9,500,000
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LIABILITIES AND SHAREHOLDERS’ EQUITY
Note
Current liabilities:
Trade and other payables (4) 1,350,000
Mortgage note payable-current portion 400,000
Total current liabilities 1,750,000
Noncurrent liabilities:
Mortgage note payable, remaining position 1,600,000
Bank loan payable, due June 30, 2010 500,000
Total noncurrent liabilities 2,100,000
Shareholders’ equity:
Share capital 3,000,000
Reserves (5) 1,400,000
Retained earnings 1,250,000
Total shareholders’ equity 5,650,000
Total liabilities and shareholders’ equity 9,500,000
Note 1 - Trade accounts receivable
Accounts receivable 800,000
Allowance for doubtful accounts ( 50,000)
Net realizable value 750,000
Note 2 - Property, plant and equipment
Accum. Book
Cost depr. value
Land 500,000 - 500,000
Building 5,000,000 2,000,000 3,000,000
Machinery 3,000,000 1,200,000 1,800,000
Equipment 400,000 100,000 300,000
Total 8,900,000 3,300,000 5,600,000
Note 3 - Intangible assets
Trademark 150,000
Secret processes and formulas 200,000
Total 350,000
Note 4 - Trade and other payables
Notes payable 750,000
Accounts payable 350,000
Income tax payable 50,000
Accrued expenses 60,000
Estimated liability for damages 140,000
Total 1,350,000
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Note 5 - Reserves
Additional paid in capital 300,000
Retained earnings appropriated for plant expansion 1,000,000
Retained earnings appropriated for contingencies 100,000
Total 1,400,000
Estimated liability for damages must be a current provision
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