Question

The bookkeeper for Geronimo Company has prepared the following balance sheet as of July 31, 2014.

GERONIMO COMPANY
BALANCE SHEET
AS OF JULY 31, 2014


Cash $69,000 Notes and accounts payable $44,000
Accounts receivable (net) 40,500 Long-term liabilities 75,000
Inventory 60,000 Stockholders's equity 155,500
Equipment (net) 84,000 $274,500
Patents 21,000
$274,500

The following additional information is provided.

1. Cash includes $1,200 in a petty cash fund and $15,000 in a bond sinking fund.
2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable $44,000 and (b) allowance for doubtful accounts $3,500.
3. Inventory costing $5,300 was shipped out on consignment on July 31, 2014. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,300 were recognized on these consigned goods.
4. Equipment had a cost of $112,000 and an accumulated depreciation balance of $28,000.
5. Income taxes payable of $6,000 were accrued on July 31. Geronimo 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 income taxes payable amount.

Prepare a corrected classified balance sheet as of July 31, 2014, from the available information, adjusting the account balances using the additional information.

Answer 1

Answer:

Total Assets = $280,500

Total liabilities = $125,000

Total Stockholders' Equity = $155,500

Explanation:

GERONIMO COMPANY

BALANCE SHEET

AS OF JULY 31, 2014

Assets

Current Assets:

Cash $60,000 (Note: 1)

Accounts Receivables $38,700 (Note: 2)

Less:

allowance for doubtful accounts ($3,500)

Net Accounts receivables $35,200

Inventories $65,300 (Note: 3)

Total Current Assets = $160,500

Long-term Investment

Bond sinking fund $15,000 (Adjustment - 1)

Property, plant, and equipment:

Equipment $112,000 (Additional Info-4)

Less: Accumulated Depreciation $28,000

Book Value, Equipment $84,000

Intangible Assets:

Patent $21,000

Total Assets = $280,500

Liabilities and Stockholders' Equity

Current Liabilities:

Notes and Accounts payable $44,000

Taxes payable $6,000 (Additional Information - 5)

Total current liabilities = $50,000

Long-term liabilities $75,000

Total liabilities $125,000

Stockholders' Equity:

Common Stock $155,500

Total liabilities and stockholders' Equity $280,500

Notes:

1. Cash $69,000

Less: Bond Sinking fund ($15,000)

Add: Income Tax offset 6,000

Total Cash at the end of the period $60,000

2. Accounts Receivable $44,000

Less: Inventory consigned recongnized as receivables $(5,300)

Net Accounts receivable = $38,700

3. Inventory =$60,000

Add: Consinged Inventory $5,300

Net Inventory = $65,300