Exercise 3–1
1. Total current
assets
2. Short-term investments
3. Retained earnings
Current assets + Long-term assets = Current liabilities + Long-term
liabilities + Paid-in capital + Retained earnings (RE)
Exercise 3–2
1. c Equipment
2. f Accounts payable
3. -a _ Allowance for uncollectible accounts
EXERCISES
Exercise 3–3
1. f Accrued interest payable 10. a Supplies
2019
5. g Bonds payable, due in 10 years 14. d _ Copyrights
speculation
Exercise 3–4
JACKSON CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets:
Cash ………………………………………………………….. $ 40,000
Marketable securities ………………………………….. 10,000
Property, plant, and equipment:
Intangible assets:
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ……………………………………….. $ 8,000
Long-term liabilities:
Bonds payable ……………………………………………. 200 ,000
Total liabilities …………………………………………. 244,000
Shareholders’ equity:
Common stock …………………………………………… $100,000
Exercise 3–5
VALLEY PUMP CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets:
Cash ……………………………………………………………………… $ 25,000
Marketable securities ……………………………………………… 22,000
Investments:
Marketable securities ……………………………………………… $22,000
Property, plant, and equipment:
Land …………………………………………………………………….. 100,000
Intangible assets:
Copyright ……………………………………………………………… 12 ,000
Total assets ……………………………………………………. $615 ,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable …………………………………………………… $ 65,000
Interest payable ……………………………………………………… 10,000
Long-term liabilities:
Shareholders’ equity:
Common stock ………………………………………………………. $200,000
Exercise 3–6
Current assets:
Cash $ 20,000
Accounts receivable 130,000
Less: Allowance for uncollectible accounts (13,000)
Note receivable 100,000
Current liabilities:
Deferred revenue (one half of $36,000) 18,000
Exercise 3–7
LOS GATOS CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets:
Cash ……………………………………………………………… $ 20,000
Accounts receivable, net of allowance for
Investments:
Restricted cash ……………………………………………….. $ 20,000
Property, plant, and equipment:
Machinery ……………………………………………………… 190,000
Intangible assets:
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ……………………………………………. $ 50,000
Long-term liabilities:
Shareholders’ equity:
Common stock, no par value; 100,000 shares
Exercise 3–8
CONE CORPORATION
Balance Sheet (Partial)
At December 31, 2018
Assets
Current assets:
Investments:
Other assets:
Prepaid rent (1) …………………………………………… 12,000
Liabilities and Shareholders’ Equity
Current liabilities:
Long-term liabilities:
(1) Note: In practice, companies often report all prepaid expenses as
current assets.
Exercise 3–9
See calculations below the balance sheet.
KORVER SUPPLY COMPANY
Balance Sheet
At December 31, 2018
Assets
Current assets:
Cash ………………………………………………………….. $168,000
Property, plant, and equipment:
Furniture and fixtures ………………………………….. $300,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ……………………………………….. $180,000
Shareholders’ equity:
Common stock …………………………………………… $100,000
Exercise 3–9 (concluded)
Beginning balance in cash $120,000
+ Cash collected from customers 780,000
Beginning balance in accounts receivable $300,000
Beginning balance in inventories $200,000
Beginning balance in furniture and fixtures, net $150,000
Beginning balance in accounts payable $190,000
Beginning balance in retained earnings $274,000
+ Sales revenue 800,000
Exercise 3–10
1. Inventory costing method A
2. Information on related-party transactions B
Exercise 3–11
1. When related-party transactions occur, companies must disclose the nature of
2. When an event that has a material effect on the company’s financial position
3. The choice of the straight-line method to determine depreciation typically is
4. This information would be included in a disclosure note describing the
5. The choice of the FIFO method to determine value inventory typically is