The trial balance of Eastwood Inc and other related

information #1900
The trial balance of Eastwood Inc and other related information

The trial balance of Eastwood Inc. and other related information for the year 2017 follows:

Additional information:

1. The inventory has a net realizable value of $212,000. The FIFO method of inventory
valuation is used.

2. The fair value-OCI investments' fair value is $378,000.

3. The amount of the Construction in Process account represents the costs to date on a building
in the process of construction. (The company is renting factory space while waiting for the new
building to be completed.) The land that the building is being constructed on cost $85,000, as
shown in the trial balance.

4. The company purchased the patents at a cost of $40,000 and the patents are being
amortized on a straight-line basis.

5. The bonds payable have a face value of $200,000, bear interest at 7% payable every
December 31, and are due January 1, 2029.
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 6. Of the remaining $20,000 unamortized discount on bonds payable (face value $200,000 less
carrying amount $180,000), $2,000 will be amortized in 2018.

7. The notes payable represent bank loans that are secured by fair value-OCI investments
carried at $120,000. These bank loans are due in 2018.

8. For common shares, an unlimited number are authorized and 500,000 are issued and
outstanding.

Instructions

(a) Prepare a statement of financial position as at December 31, 2017, ensuring that all
important information is fully disclosed.

(b) From the perspective of a potential creditor, discuss the importance of proper classification
of Eastwood's Construction in Progress account.

The trial balance of Eastwood Inc and other related information

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