[EES] 5-1 (Statement of Financial Postion Classifications) Presented below are a number of statement of financial position accounts of Cusninghom, Inc. (@)_ Investment in Preference Shares. 1) Accrued Interest on Notes Payable. (b) ‘Treasury Shares. Deficit. (©) Share Capital—Ondinary. ()) Trading Securities. (@) Cash Dividends Payable. 4). Income Taxes Payable. fe) Accumulated Depreciation. () Unearned Subscription Revenue, (0 Warehouse in Process of Construction. (tm) Work in Process. (g) Petty Cash, (a) Accrued Vacation Pay, Instructions For each of the accounts above, indicate the proper statement of financial position classification, In the ‘ase of borderline items, indicate the additional information that would be required to determine the proper classification. £52 (Classification of Statement of Financial Position Accounts) Presented below are the captions of Nikos Company's statement of financial position. (a) Non-current assets. (© Equity ) Investments (@) Non-current liabilities, (2) Property, plant, and equipment (©) Current liabilities (8) Intangible assets. (8) Other assets, () Current assetsInstructions Indicate by letter where each of the following items would be classified. 1. Share capital—preference. LL Accumulated other comprehensive income. 2 Goodwill 42, Notes payable (due next year) 3. Wages payable. 13, Office supplies. 44. Trade accounts payable. AM. Share capital—ordinary. 5. Buildings 15, Land. 6, Trading securities. 16, Bond sinking fund, 7. Current portion of longe-term debt. 17, Merchandise inventory, 8. Patent 18, Prepaid insurance, 9. Allowance for doubtful accounts. 19, Bonds payable, 10. Accounts receivable 20. Taxes payable. [2EI 5-3 (Classification of Statement of Financial Position Accounts) Assume that Masters Enterprises. uses the following headings on its statement of financial position 2) Investments () Current liabilities. (@) Property, plant, and equipment. (h) Share capital (© Intangible assets (Share premium. (2) Other assets, Retained earnings. (©) Current assets, Accumulated other comprehensive income. (8 Non-current labiltes. Instructions Indicate by letter how each of the following usually should be classified. If an item should appear in a rote to the financial statements, use the etter “N" to indicate this fact If an item need not be reported at all on the statement of financial position, use the letter "X.”| 1. Unexpired insurance. 12, Twenty-year issue of bonds payable that will 2. Share owned in associated companies. mature within the next year. (No sinking fund 3. Uneamed subscriptions revenue. ‘exists, and refunding is not planned.) 44 Advances to suppliers. 13, Accounts receivable 5. Unearned rent revenue. 1M. Unrealized gain on non-tading equity securities. 6. Share capital—preference, 15, Interest on bonds payable 7. Share premium—proference. 16, Salaries that company budget shows will be paid 8. Copyrights, to employees within the next year, 9. Petty cash fund. 17, Accumulated depreciation, 10, Sales tax payable, 11, Interest on notes receivable. [ZEB t5-4 Preparation of a Classified Statement of Financial Posi following accounts at the end ofthe current year ya) Assume that Gulistan Ine. has the 1. Share Capital—Ordinary. 14. Accumulated Depreciation—Buildings. 2. Long-Term Note Payable 15, Cash Restricted for Plant Expansion. 3. Treasury Shares (at cos! 16. Land Held for Future Plant Site. 44. Note Payable, short-term. 1, Allowance for Doubtful Accounts — 5. Raw Materials. ‘Accounts Receivable 6, Long-Term Investment in Preference Shares. 18. Retained Earnings. 7. Unearned Rent Revere 19, Share Promium—Ordinary, 8. Work in Process. 20, Unearned Subscriptions Revenue, 9. Copyrights 21. Receivables—Orficers (due in 1 year). 10. Buildings. 22. Finished Goods, 1, Notes Receivable (short-term). 2B. Accounts Receivable. 12 Cash. 24, Bonds Payable (due in 4 years), 1B. Accrued Salaries Payable. Instructions [Prepare a classified statement of financial position in good form. (No monetary amounts are necessary.) £3) €55 (Preparation of a Corrected Statement of Financial Position) Bruno Company has decided to expand its operations. The bookkeeper recently completed the statement of financial position (presented ‘on the next page) in order to obtain additional funds for expansion,$260,000 ‘Accounts receivate (net) ‘340,000 Inventories at lower f-average-costor-net realzable valve 401,000 Tading socurites—at cost air valve $120,000) 140,000, Property plant and equipment ‘Butaing net 570,000 Office equipment fet) 180,000 Lane hel fr fuze use 175,000, 180,000 ‘90,000 12.000 136,000 125,000, 182,000 49,000, 8,000, Non-curerttabeties ‘Bonds payate 100,000 Equty ‘Share capital—ordinary, $1.00 par, authorized *400,000 shares, issued 200,000 290,000 ‘Share promium—orinary ‘80,000 Retained earnings 2 Instructions Prepare a revised statement of financial positon given the available information. Assume thatthe accurmu- lated depreciation balance for the buildings is $160,000 and forthe office equipment, $105,000, The allowance for doubtful accounts has a balance of $17,000, The pension obligation is considered a nor-current liability. 55-6 (Corrections of a Statement of Financial Position) The bookkeeper for Garfield Company has prepared the following statement of financial position as of July 31, 2010. ‘GARFIELD COMPANY STATEMENT OF FINANCIAL POSTION ‘AS OF JULY 31, 2010 Equpment thet $6400 Equly 155 500 Patents 21,000 Non-current iabitios 75,000 Irwentores {60,000 Notes and accounts payable _ 44,000, ‘Accounts recelvable (pet) 40.800 $274,500 Cash 274.00 $274,500 ‘The following additional information is provided, 1. Cash includes $1,200 in a petty cash fund and $12,000 in a bond sinking fund, 2. ‘Tenet accounts receivable balance is comprised ofthe following three items: (@) accounts receiv able—debit balances $52,000; (b) accounts receivable~credit balances $8,000; (<) allowance for doubtful accounts $3,500. 3. Merchandise inventory costing $5,300 was shipped out on consignment on July 31, 2010. The end- ing 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. Taxes payable of $2,000 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.Instructions Prepare a corrected classified statement of financial position as of July 31, 2010, from the available info ‘mation (page 267), adjusting the account balances using the additional information 5:7 (Current Assets Section of the Statement of Financial Position) Presented below are selected accounts of Aramis Company at December 31, 2010, + Finished Goods’ € 52,000 Cost of Goods Salt 2,300,000 Revenue Received in Advance £0,000 Notes Receivabio ‘20,000 Equipment 253,000 Accounts Receivable 161,000 Workn-Process ‘34,000 Raw Materials 167900 Cash 42000 Supplies Expense 60,000 TTading Securtios 31,000 Alowarce for Doubtul Accounts 12,000 Customer Advances 36,000 Licenses 48,000 Gash Restcted for Plant Expansion 50,000 Share Premium—Ordinary 88,000 ‘Treasury Shares 22,000 “The following additional information is availabe. 1. Inventories are valued at lower-of-cost-or-market using FIFO. 2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is 650,500. 3. The trading securities have a fair value of €29,000. ‘4. The notes receivable are due April 30, 2012, with interest receivable every April 30, The notes bear interest at 6%. (Hint: Acceue interest due on December 31, 2010.) 5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of £€50,00 are pledged as collateral on a bank loan. 6. Licenses are recorded net of accumulated amortization of €14,000. 7. ‘Treasury shares are recorded at cost. Instructions Prepare the current assets section of Aramis Company's December 31, 2010, statement of financial posi- tion, with appropriate disclosures. ] £58 (Gument vs. Non-Cumrent Liabilities) Pascal Corporation is preparing its December 31, 2010, statement of nancial postion. The fllowing items may be reported es either cirent or non-current Tabi. 1. On December 15,2010, Pascal declared a cash dividend of $200 per shar to shareholders of record on December 31, The dividend is payable on January 15,2011 Pascal has issued 1000000 ord nary shares of which 50,00 shares are held in teary. 2. ‘AtDecember 31, bonds paysble of $100000 00 are outstanding, The bonds pay 6% interest every September 30 and mature i installments of $25,000,000 every September 3, beginning Septem ber 30,2011 3. At December 31, 2008, customer advances were $12,000,000. During 2010, Pascal cllected $3000.00 of customer advances, and advances of $25,00,000 were eared Instructions For each item above, indicate the dollar amounts to be reported as a current liability and as a non-current liability, if any. iJ €59 (Current Assets and Current Liabilities) The current assts and current lists sections ofthe statement of financial position of Agincourt Company appear as follows. ‘AGINCOURT COMPANY STATEMENT OF FHANCIAL POSTON (PARTL) DeceNDEn 31, 2010 _ Trventores ‘$171,000 Notes payable § 67.000 ecountsreesivable ‘Accounts payable _ 61,000 Less: Alowaneo for ‘doubt aocounts 62,000 Prepaid expences ‘9,000 cash 40,000 $202,000“The following errors in the corporation's accounting have been discovered: 1. January 2011 cash disbursements entered as of December 2010 included payiments of accounts ‘payable in the amount of $35,000, en 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, $10,000 had been received on consignment; the remainder was purchased £o.b. destination, terms 2/10, 0/30. 3. Sales forthe fist four days in January 2011 in the amount of $30,000 were entered inthe sales book 1 of December 31, 2010. OF these, $21,500 were sales on account andl the remainder were cash sales. 4 Cash, not including cash sales, collected in January 2011 and entered as of December 31, 2010, totaled $35,324. OF this amount, $23,324 was received on account after cash discounts of 2% had been deducted: the remainder represented the proceeds of a bank loan. Instructions (@) Resiate the current assets and current liabilities sections ofthe statement of financial postion in accordance with good accounting practice, (Assume that both accounts receivable and accounts payable are recorded gross) () State the net effect of your adjustments on Agincourt Company's retained earnings balance. 5-10 (Current Liabilities) Mary Pierce {is the controller of Arnold Corporation and is responsible for the preparation ofthe year-end financial statements. The following transactions occurred during the year Bonuses to key employees based on net income for 2010 are estimated to be $150,000. {b) On December 1, 2010, the company borrowed $500,000 at 8% per year. Interests paid quarterly (©) Credit sales for the year amounted to $10,000,000. Arnold's expease provision for doubtful ac- counts is estimated to be 2% of evedt sales. (4) On December 15, 2010, the company declared a $2.00 per share dividend on the 40,000 ordinary shares outstanding, to be paid on January 5, 2011. (©) During the year customer advances of $160,000 were received; 850/000 of this amount was earned bby December 31,2010. Instructions For each item above, indicate the dollar amount to be reported as a current liability. If liability is not re- ported, explain why. 5-11. (Statement of Financial Position Preparation) Presented below is the adjusted trial balance of Abbey Corporation at December 31,2010 Greits cash Oftice Supplies repaid Insurance Equipment ‘Accumulated Depreciation Equipment 29000 Trademarks, Aveounis Payable 10,000 Wiapes Payable 500 Unearmed Service Rovenue 2,000 ‘Bonds Payable, ue 2017, 9,000 ‘Shae Canta—Ocnary 10.000 Fetaines earings 20,000 ‘Sarce Revenue 10,000 Wages Expense Insurance Expense Fert Expense Interest Expense ‘otal ‘Additional information: 1. Net loss for the year was £2,500. 2. No dividends were declared during 2010.Instructions. Prepare a classified statement of financial position as of December 31, 2010. [3 £522 reparation ofa Statement of Financial Position) Presented below is the trial balance of Vivaldi Corporation at December 31,2010. Debit Credits Cash 3 187,000, Sales '$ 7,900,000 Trading Securities (at cost, $145,000) 353,000 Cost of Goods Sold 4,300,000 Long-term investments in Bonds "289,000 LLongstorm investments in Share Capital—Ordinary 277,000 ‘Short-tecm Notes Payable 20,000 ‘Accounts Payable 455,000 Seling Expenses 2,000,000 Investment Revere 63,000 Lana 260,000 Buildings 1,049,000 Dividends Payable 136,000 ‘Accrued Uabiltios 196,000 ‘Accounts Receivable 495,000 ‘Accumulated Depreciation—Builsings 352,000 ‘Alowance for Doubtul Accounts "25,000 ‘Administrative Exoenses 900,000 Intorest Expense 211,000 Inventories 597,000, Provision for Pensions (ong-term) 80,000 Long-term Notes Payable 900,000 Equipment 600,000 ‘Bonds Payable + 900,000 Accumulated Depreciation Equipment ‘80,000 Franchise 160,000 Share Captal—Ordinary ($5 par) 1,090,000 Treasury Shares. 181,000 Patont 185,000 Retained Earrings ‘Accumulated Other Comprchencive Income Totals Instructions Prepare a statement of financial position at December 31, 2010, for Vivaldi Corporation. Ignore income taxes.