Exercise 3-9 (Static) Balance sheet preparation (LO3-2, 3-3] The following is the balance sheet of Korver…
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Question “Exercise 3-9 (Static) Balance sheet preparation (LO3-2, 3-3] The following is the balance sheet of Korver…”
Exercise 3-9 (Static) Balance sheet preparation (LO3-2, 3-3] The following is the balance sheet of Korver Supply Company at December 31. 2020 (prior year). 6.25 points 8 02:52:31 KORVER SUPPLY COMPANY Balance Sheet At December 31, 2020 Assets Cash Accounts receivable Inventory Furniture and fixtures (net) Total assets Liabilities and Shareholders’ Equity Accounts payable (for merchandise) Notes payable Interest payable Common stock Retained earnings Total liabilities and shareholders’ equity $120,000 300,000 200,000 150,000 $770,000 eBook Print References $190,000 200,000 6,000 100,000 274,000 $770,000 Transactions during 2021 (current year) were as follows: 1. Sales to customers on account 2. Cash collected from customers 3. Purchase of merchandise on account 4. Cash payment to suppliers 5. Cost of merchandise sold 6. Cash paid for operating expenses 7 rachnoid for interest on nntas $800,000 780,000 550,000 560,000 500,000 160,000 12 AAA
Transactions during 2021 (current year) were as follows: 1. Sales to customers on account 2. Cash collected from customers 3. Purchase of merchandise on account 4. Cash payment to suppliers 5. Cost of merchandise sold 6. Cash paid for operating expenses 7. Cash paid for interest on notes $800,000 780,000 550,000 560,000 500,000 160,000 12,000 Additional Information: The notes payable are dated June 30, 2020, and are due on June 30, 2022. Interest at 6% is payable annually on June 30. Depreciation on the furniture and fixtures for 2021 is $20,000. The furniture and fixtures originally cost $300,000. Required: Prepare a classified balance sheet at December 31, 2021, by updating ending balances from 2020 for transactions during 2021 and the additional information. The cost of furniture and fixtures and their accumulated depreciation are shown separately. (Amounts to be deducted should be indicated by a minus sign.) KORVER SUPPLY COMPANY Balance Sheet At December 31, 2021 Assets Current assets: Cash < Prev 11 of 16 Next >
KORVER SUPPLY COMPANY Balance Sheet At December 31, 2021 Assets Current assets: Cash Accounts receivable Inventory Total current assets Property, plant, and equipment: Furniture and fixtures Accumulated depreciation Net property, plant, and equipment Total assets Liabilities and Shareholders’ Equity Current liabilities: Accounts payable Notes payable Interest payable Total current liabilities Shareholders’ equity: Common stock Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity
Answer
Balance sheet | ||||||
$ | $ | |||||
Assets | ||||||
Current assets: | ||||||
Cash | (Note:1) | 168000 | ||||
Accounts receivable | (Note:2) | 320000 | ||||
Inventory | (Note:3) | 250000 | ||||
Total current assets | 738000 | |||||
Property,plant and equipment: | ||||||
Furniture and fixtures | (Original cost) | 300000 | ||||
Accumulated depreciation | (Note:4) | 170000 | ||||
Net property,plant and equipment | 130000 | |||||
Total assets | 868000 | |||||
Liabilities and shareholder’s equity | ||||||
Current liabilities: | ||||||
Accounts payable | (Note:5) | 180000 | ||||
Notes payable | (Due next year) | 200000 | ||||
Interest payable | (Note:6) | 6000 | ||||
Total current liabilities | 386000 | |||||
Shareholder’s equity: | ||||||
Common stock | 100000 | |||||
Retained earnings | (Note:7) | 382000 | ||||
Total shareholder’s equity | 482000 | |||||
Total liabilities and shareholder’s equity | 868000 | |||||
Note:1 | ||||||
Cash | ||||||
$ | $ | |||||
Beginning balance | 120000 | |||||
Add: Cash collected from customers | 780000 | |||||
900000 | ||||||
Less: | ||||||
Cash payment to suppliers | 560000 | |||||
Cash paid for operating expenses | 160000 | |||||
Cash paid for interest on notes | 12000 | 732000 | ||||
Ending balance | 168000 | |||||
Note:2 | ||||||
Accounts receivable | ||||||
$ | ||||||
Beginning balance | 300000 | |||||
Add: Sales to customers on account | 800000 | |||||
1100000 | ||||||
Less: Cash collected from customers | 780000 | |||||
Ending balance | 320000 | |||||
Note:3 | ||||||
Inventory | ||||||
$ | ||||||
Beginning balance | 200000 | |||||
Add: purchase of marchandise on account | 550000 | |||||
750000 | ||||||
Less: Cost of merchandise sold | 500000 | |||||
Ending balance | 250000 | |||||
Note:4 | ||||||
Furniture and fixtures (net)=Furniture and fixtures (at original cost)-Accumulated depreciation | ||||||
150000=300000-Accumulated depreciation | ||||||
Accumulated depreciation (beginning balance)=300000-150000=$ 150000 | ||||||
Accumulated depreciation (ending balance)=Beginning balance+CY depreciation=150000+20000=$ 170000 | ||||||
Note:5 | ||||||
Accounts payable | ||||||
$ | ||||||
Beginning balance | 190000 | |||||
Add: Purchase of merchandise on account | 550000 | |||||
740000 | ||||||
Less: Cash payment to suppliers | 560000 | |||||
Ending balance | 180000 | |||||
Note:6 | ||||||
Interest payable | ||||||
$ | ||||||
Beginning balance | 6000 | |||||
Add: Interest expense for the year | (200000*6%) | 12000 | ||||
18000 | ||||||
Less: Cash paid for interest | 12000 | |||||
Ending balance | 6000 | |||||
Note:7 | ||||||
Retained earnings | ||||||
$ | ||||||
Beginning balance | 274000 | |||||
Add: Net income | (Note:8) | 108000 | ||||
Ending balance | 382000 | |||||
Note:8 | ||||||
Net income: | ||||||
$ | $ | |||||
Sales revenue | 800000 | |||||
Less: Cost of merchandise sold | 500000 | |||||
Gross profit | 300000 | |||||
Less: | ||||||
Operating expenses | 160000 | |||||
Interest expenses | 12000 | |||||
Depreciation expense | 20000 | 192000 | ||||
Net income | 108000 |
Conclusion
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