Alternate Exercises and Problems 3–1
Chapter 3 The Balance Sheet and Financial Disclosures
EXERCISES
Exercise 3-1
1. b Note receivable, due in 2 years 10. a Inventories
2. a Accounts receivable 11. d Goodwill
3–2 Intermediate Accounting, 8/e
Exercise 3-2
CURTIS CORPORATION
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash and cash equivalents …………………………….
$ 70,000
Marketable securities …………………………………..
15,000
Investments:
Note receivable …………………………………………..
50,000
Property, plant, and equipment:
Machinery and equipment …………………………….
Less: Accumulated depreciation ……………………
$489,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ………………………………………..
$ 45,000
Wages payable ……………………………………………
10,000
Interest payable …………………………………………..
Long-term liabilities:
Bonds payable …………………………………………….
100,000
Shareholders’ equity:
Common stock ……………………………………………
Retained earnings ………………………………………..
131,000
$489,000
Accounts receivable …………………………………….
Interest receivable ……………………………………….
Inventories …………………………………………………
Prepaid insurance ………………………………………..
Exercise 3-3
1. Depreciation method A
Exercise 3-4
1. Current ratio [$150 + 400 + 500] ÷ $600 = 1.75
Exercise 3-5
Current Acid-test Debt to
Action Ratio Ratio Equity Ratio
1. Issuance of common stock for cash I I D
2. Purchase of inventory on account I D I
PROBLEMS
Problem 3-1
ALEXANDRIA EXPLORATION CORPORATION
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash and cash equivalents ……………………………………………..
$ 62,000
Short-term investments ………………………………………………….
130,000
Accounts receivable, net of allowance for
uncollectible accounts of $15,000 ……………………………….
155,000
Interest receivable …………………………………………………………
Inventories ……………………………………………………………………
200,000
Supplies ……………………………………………………………………….
Total current assets ………………………………………………….
553,000
Investments:
Land held for sale ………………………………………………………….
$ 20,000
Note receivable …………………………………………………………….
50,000
Total investments ……………………………………………………
70,000
Property, plant, and equipment:
Land ……………………………………………………………………………
80,000
Buildings ……………………………………………………………………..
500,000
Machinery ……………………………………………………………………
250,000
830,000
Less: Accumulated depreciation ……………………………………..
Net property, plant, and equipment ……………………………
600,000
Intangibles:
Goodwill ……………………………………………………………………..
36,000
Total assets …………………………………………………………….
$1,259,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ………………………………………………………….
$ 125,000
Interest payable …………………………………………………………….
Bonds payable ………………………………………………………………
Total current liabilities …………………………………………….
365,000
Bonds payable ………………………………………………………………
300,000
Shareholders’ equity:
authorized; 500,000 shares issued and outstanding …………
500,000
Retained earnings ………………………………………………………….
$1,259,000
Common stock, no par value; 1,000,000 shares
Alternate Exercises and Problems 3–5
Problem 3-2
TILLAMOO CHEESE COMPANY
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash and cash equivalents ………………………………………………
$ 190,000
Investment in stocks ………………………………………………………
Accounts receivable ………………………………………………………
Inventories ……………………………………………………………………
235,000
Prepaid expenses …………………………………………………………..
Investments:
Investment in bonds ………………………………………………………
260,000
Property, plant, and equipment:
$ 950,000
Buildings ……………………………………………………………………..
Equipment ……………………………………………………………………
900,000
3,050,000
Less: Accumulated depreciation ……………………………………..
2,450,000
Intangibles:
Patent ………………………………………………………………………….
300,000
$3,790,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable …………………………………………………………
$ 260,000
Interest payable ……………………………………………………………
Other accrued liabilities ………………………………………………..
Notes payable ………………………………………………………………
Long-term liabilities:
Notes payable ………………………………………………………………
100,000
1,100,000
Shareholders’ equity:
Common stock, no par value; 2,000,000 shares
authorized; 1,000,000 shares issued and outstanding ………
1,500,000
Retained earnings …………………………………………………………
2,170,000
$3,790,000