Problem 3–4
Retained earnings …………………………………………………………..
202,000
602,000
(1) Includes $30,000 in U.S. treasury bills.
WEISMULLER PUBLISHING COMPANY
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash and cash equivalents (1) ………………………………………….
$ 95,000
Short-term investments …………………………………………………..
Accounts receivable, net of allowance for uncollectible
Inventories ……………………………………………………………………
Prepaid expenses (2) ……………………………………………………….
Property, plant, and equipment:
Machinery and equipment ………………………………………………
$320,000
Less: Accumulated depreciation ………………………………………
210,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable …………………………………………………………..
$ 60,000
Interest payable ……………………………………………………………..
20,000
Deferred revenues ………………………………………………………….
Taxes payable ……………………………………………………………….
Note payable …………………………………………………………………
40,000
Current maturities of long-term debt ………………………………..
20,000
Long-term liabilities:
Notes payable ………………………………………………………………..
140,000
Shareholders’ equity:
Common stock, no par value; 800,000 shares
3–42 Intermediate Accounting, 8/e
Problem 3–5
EXCELL COMPANY
Balance Sheet
At June 30, 2016
Assets
Current assets:
Cash and cash equivalents (1) …………………………………………
Short-term investments ………………………………………………….
Accounts receivable, net of allowance for uncollectible
accounts of $15,000 ……………………………………………………
Interest receivable …………………………………………………………
Investments:
Note receivable ……………………………………………………………..
$ 65,000
Land held for sale ………………………………………………………….
25,000
Property, plant, and equipment:
Land ……………………………………………………………………………
50,000
Buildings ……………………………………………………………………..
Equipment ……………………………………………………………………
265,000
Less: Accumulated depreciation ……………………………………..
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ………………………………………………………….
Accrued expenses ………………………………………………………….
Note payable …………………………………………………………………
Current maturities of long-term debt ………………………………..
Long-term liabilities:
Note payable …………………………………………………………………
Mortgage payable ………………………………………………………….
Shareholders’ equity:
Common stock, no par value; 500,000 shares
authorized; 200,000 shares issued and outstanding ………….
100,000
Retained earnings ………………………………………………………….
3–44 Intermediate Accounting, 8/e
Problem 3–6
Requirement 1
VOSBURGH ELECTRONICS CORPORATION
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash and cash equivalents (1) …………………………………..
$ 117,000
Marketable securities (2) ………………………………………….
132,000
Accounts receivable (net) ………………………………………..
115,000
Loans to employees ………………………………………………..
Interest receivable …………………………………………………..
Note receivable—current portion ……………………………..
Inventories …………………………………………………………….
215,000
Prepaid expenses ……………………………………………………
16,000
Total current assets ……………………………………………
697,000
Investments:
Marketable securities ……………………………………………….
$ 35,000
Note receivable ………………………………………………………
200,000
Total investments ……………………………………………..
235,000
Property, plant, and equipment:
280,000
Buildings ………………………………………………………………
1,550,000
Machinery and equipment ……………………………………….
637,000
2,467,000
Less: Accumulated depreciation ………………………………
(830,000)
1,637,000
Intangible assets:
Patent ……………………………………………………………………
152,000
Franchise ………………………………………………………………
40,000
192,000
Problem 3–6 (continued)
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ……………………………………………………
$ 189,000
Dividends payable ………………………………………………….
10,000
Interest payable ………………………………………………………
16,000
Taxes payable ………………………………………………………..
40,000
Deferred revenue (3) ………………………………………………..
48,000
Long-term liabilities:
Notes payable ………………………………………………………..
$ 300,000
Deferred revenue (3) ………………………………………………..
12,000
Total long-term liabilities …………………………………
312,000
Shareholders’ equity:
authorized; 500,000 shares issued and outstanding …..
2,000,000
$2,761,000
Common stock, no par value; 1,000,000 shares
Problem 3–6 (concluded)
(1) $67,000 + 50,000 in treasury bills considered a cash equivalent.
Requirement 2
Cash equivalents—the policy used to determine what items are considered to be
cash equivalents.
Accounts receivable, net—disclosure on the face of the statement of the
allowance for uncollectible accounts, if material.
3–48 Intermediate Accounting, 8/e
Problem 3–7
Notes payable …………………………..…………………………………..
Retained earnings (2) …………………………………………………….
HUBBARD CORPORATION
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash …………………………………………………………………………….
Marketable securities …………………………………………………….
Accounts receivable (net) ……………………………………………….
Total current assets ………………………………………………….
Marketable securities ……………………………………………………..
Land held for sale ………………………………………………………….
50,000
Total investments …………………………………………………….
Property, plant, and equipment:
Land (1) ……………………………………………………………………….
130,000
Buildings ……………………………………………………………………..
750,000
Machinery ……………………………………………………………………
280,000
Less: Accumulated depreciation ……………………………………..
Intangible assets:
Patent ……………………………………………………….………………….
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ………………………………………………………….
Current maturities of long-term debt ………………………………..
Total current liabilities ……………………………………………..
Long-term liabilities:
Problem 3–8
Solve for missing amounts:
Liabilities Equity = 1.2
$18,000 Equity = 1.2
Assets = Liabilities + Equity
Assets = $18,000 + 15,000 = $33,000
Problem 3–8 (concluded)
SANDERSON MANUFACTURING COMPANY
Balance Sheet
At December 31, 2016
($ in 000s, except share data)
Assets
Current assets:
Cash ……………………………………………………………………..
Short-term investments ……………………………………………
uncollectible accounts ………………………………………….
Inventories:
Raw materials and work in process ………………………..
Finished goods …………………………………………………….
Prepaid expenses ……………………………………………………
Total current assets ……………………………………………
Property, plant, and equipment:
Equipment …………………………………………………………….
15,000
Less: Accumulated depreciation ………………………………
(4,200)
Net property, plant, and equipment ……………………..
Intangible assets:
Total assets ……………………………………………………
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable …………………………………………………..
Interest payable ……………………………………………………….
Deferred revenue ……………………………………………………
Current maturities of long-term debt …………………………
Total current liabilities ………………………………………
Long-term liabilities:
Deferred revenue ……………………………………………………
$ 1,500
Note payable ………………………………………………………….
3,000
Bonds payable ……………………………………………………….
5,500
Shareholders’ equity:
Common stock, no par, 400,000 shares authorized, ……..
250,000 shares issued and outstanding
10,000
Retained earnings …………………………………………………..
5,000
Solutions Manual, Vol.1, Chapter 3 3–51
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Problem 3–9
HHD, INC.
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash …………………………………………………………………………….
$ 150,000
Investment in stocks ………………………………………………………
90,000
Accounts receivable ………………………………………………………
200,000
2,800,000
Less: Accumulated depreciation ……………………………………..
(800,000)
Net property, plant, and equipment ……………………………
2,000,000
Intangible assets:
Patent …………………………………………………………………………..
110,000
Copyright …………………………………………………………………….
90,000
Total intangible assets ……………………………………………..
200,000
$3,300,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ………………………………………………………..
$ 100,000
Notes payable ……………………………………………………………..
150,000
Taxes payable ……………………………………………………………..
60,000
Total current liabilities ……………………………………………
310,000
Long-term liabilities:
Notes payable ……………………………………………………………..
$ 90,000
Bonds payable …………………………………………………………….
Total long-term liabilities ……………………………………….
1,190,000
Common stock, no par, 500,000 shares authorized,
200,000 shares issued and outstanding …………………………
1,000,000
Retained earnings ………………………………………………………..
1,800,000
$3,300,000
Inventories ……………………………………………………………………
225,000
Prepaid insurance ………………………………………………………….
25,000
Total current assets ………………………………………………….
690,000
Investment in stocks ………………………………………………………
$ 160,000
Restricted cash ……………………………………………………………..
Total investments …………………………………………………….
410,000
Property, plant, and equipment:
800,000
Buildings ……………………………………………………………………..
1,500,000
Equipment ……………………………………………………………………
500,000
3–52 Intermediate Accounting, 8/e
Problem 3–10
(1) Cash receipts of $560,000 less cash disbursements of $393,000.
MELODY LANE MUSIC COMPANY
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash (1) ……………………………………………………..
Inventories …………………………………………………
Prepaid rent ………………………………………………..
Property, plant, and equipment:
Equipment and furniture ………………………………
$ 40,000
Less: Accumulated depreciation …………………..
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable (2) …………………………………..
Interest payable …………………………………………..
Loan payable ………………………………………………
Shareholders’ equity:
Common stock, no par, 100,000 shares
Communication Case 3–1
IBM manufactures and sells personal and mainframe computers. The computers
included as current assets in the balance sheet for the company represent the cost of
Analysis Case 3–2
Requirement 1
Current assets include cash and other assets that are reasonably expected to be
converted to cash or consumed during one year, or within the normal operating cycle
Requirement 2
Assets:
Cash Normally classified as current, however, if restriction
prohibits use of the cash, could be classified as noncurrent.
Receivables Depends on the expected date of collection.
CASES
3–54 Intermediate Accounting, 8/e
Communication Case 3–3
The critical question that student groups should address is whether the cost of the
egg-producing flock should be classified as inventory or as property, plant, and
1. The definitions of inventory and property, plant, and equipment.
The definition of inventory according to GAAP [FASB ASC Master Glossary] is
2. The definition of a current asset.
GAAP [FASB ASC Master Glossary and FASB ASC 210–10–45–1 through 4:
“Balance Sheet–Overall–Other Presentation Matters–General–Classification of
Current Assets”] provides the following definition of a current asset:
Case 3–3 (concluded)
3. Regardless of the classification of the cost of the chickens, the cost capitalized
when the chickens begin to lay eggs must be depreciated down to an estimated salvage
value at the end of the egg-laying life. This is necessary to properly match expenses