Question
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The following is a list (in random order) of KIP International Products Company's December 31, 2016...
The following is a list (in random order) of KIP International Products Company's December 31, 2016 balance sheet accounts of the International Products Company:
| Additional Paid-In Capital on Preferred Stock | $ 1,680 | Accounts Payable | $ 10,200 | ||||
| Accounts Receivable | 14,200 | Prepaid Insurance | 840 | ||||
| Dividends Payable | 1,770 | Discount on Bonds Payable | 1,900 | ||||
| Buildings | 68,100 | Common Stock, $10 par | 13,000 | ||||
| Bonds Payable (due 2019) | 23,500 | Equipment | 30,500 | ||||
| Retained Earnings | 97,900 | Allowance for Doubtful Accounts | 730 | ||||
| Office Supplies | 1,950 | Preferred Stock, $50 par | 10,500 | ||||
| Current Income Taxes Payable | 2,750 | Accumulated Depreciation: Buildings | 9,000 | ||||
| Accumulated Depreciation: Equipment | 9,000 | Current Interest Payable | 2,420 | ||||
| Patents (net) | 3,400 | Investment in Held-to-Maturity Bonds | 9,000 | ||||
| Notes Payable (due January 1, 2019) | 10,300 | Cash | 9,200 | ||||
| Inventory | 40,100 | Treasury Stock (at cost) | 1,300 | ||||
| Additional Paid-In Capital on Common Stock | 7,300 | Accrued Wages | 2,040 | ||||
| Sinking Fund for Bond Retirement | 7,600 | Land | 14,000 |
Required:
1. Prepare a properly classified balance sheet according to U.S. GAAP for KIP as of December 31, 2016.
| Kip International Products Company | |||
| Balance Sheet | |||
| December 31, 2016 | |||
| Assets | |||
| Current Assets: | |||
| $ | |||
| $ | |||
| Prepaid items: | |||
| $ | |||
| Total current assets | $ | ||
| Long-Term Investments: | |||
| $ | |||
| Total long-term investments | |||
| Property, Plant, and Equipment: | |||
| $ | |||
| $ | |||
| $ | |||
| Total property, plant, and equipment | |||
| Intangible Assets: | |||
| Total Assets | $ | ||
| Liabilities | |||
| Current Liabilities: | |||
| $ | |||
| Total current liabilities | $ | ||
| Long-Term Liabilities: | |||
| $ | |||
| $ | |||
| Total long-term liabilities | |||
| Total Liabilities | $ | ||
| Shareholders' Equity | |||
| Contributed Capital: | |||
| $ | |||
| Total contributed capital | $ | ||
| Total contributed capital and retained earnings | $ | ||
| Total shareholders' equity | |||
| Total liabilities and shareholders' equity | $ | ||
2. Assume instead that KIP uses IFRS. Prepare its balance sheet as of December 31, 2016.
| KIP INTERNATIONAL PRODUCTS COMPANY | |||
| Balance Sheet | |||
| December 31, 2016 | |||
| Assets | |||
| Noncurrent Assets | |||
| $ | |||
| $ | |||
| $ | |||
| Total noncurrent assets | $ | ||
| Current Assets | |||
| $ | |||
| $ | |||
| Prepaid items | |||
| $ | |||
| Total current assets | |||
| Total Assets | $ | ||
| Shareholders' Equity | |||
| Contributed Capital | |||
| $ | |||
| Total contributed capital | $ | ||
| Retained earnings | |||
| Total contributed capital and Retained earnings | $ | ||
| Total Shareholders' Equity | |||
| Liabilities | |||
| Noncurrent Liabilities | |||
| $ | |||
| $ | |||
| Total noncurrent liabilities | |||
| Current Liabilities | |||
| $ | |||
| Total current liabilities | $ | ||
| Total Liabilities | $ | ||
| Total Shareholders' Equity and Liabilities | $ | ||
Solutions
Expert Solution
1. Prepare a properly classified balance sheet according to U.S. GAAP for KIP as of December 31, 2016.
Answer:
| KIP INTERNATIONAL PRODUCTS COMPANY | |||
| Balance Sheet | |||
| December 31, 2016 | |||
| Assets | |||
| Current Assets: | |||
| Cash | 9,200 | ||
| Accounts receivable | 14,200 | ||
| Less: Allowance for doubtful accounts | (730) | 13,470 | |
| Inventory | 40,100 | ||
| Prepaid items: | |||
| Insurance | 840 | ||
| Office supplies | 1,950 | 2,790 | |
| Total current assets | 65,560 | ||
| Long-Term Investments: | |||
| Investment in held-to-maturity bonds | 9,000 | ||
| Sinking fund for bond retirement | 7,600 | ||
| Total long-term investments | 16,600 | ||
| Property, Plant, and Equipment: | |||
| Land | 14,000 | ||
| Buildings | 68,100 | ||
| Less: Accumulated depreciation | (9,000) | 59,100 | |
| Equipment | 30,500 | ||
| Less: Accumulated depreciation | (9,000) | 21,500 | |
| Total property, plant, and equipment | 94,600 | ||
| Intangible Assets: | |||
| Patents (net) | 3,400 | ||
| Total Assets | 180,160 | ||
| Liabilities | |||
| Current Liabilities: | |||
| Accounts payable | 10,200 | ||
| Current interest payable | 2,420 | ||
| Dividends payable | 1,770 | ||
| Accrued wages | 2,040 | ||
| Current income taxes payable | 2,750 | ||
| Total current liabilities | 19,180 | ||
| Long-Term Liabilities: | |||
| Bonds payable (due 2019) | 23,500 | ||
| Less: Discount on bonds payable | (1,900) | ||
| Notes payable (due 1/1/2019). | 21,600 | ||
| Total long-term liabilities | 10,300 | 31,900 | |
| Total Liabilities | 51,080 | ||
| Shareholders’ Equity | |||
| Contributed Capital: | |||
| Preferred stock $50 par | 10,500 | ||
| Common stock, $10 par | 13,000 | ||
| Additional paid-in capital on preferred stock | 1,680 | ||
| Additional paid-in capital on common stock | 7,300 | ||
| Total contributed capital | 32,480 | ||
| Retained earnings | 97,900 | ||
| Total contributed capital and retained earnings | 130,380 | ||
| Less: Treasury stock (at cost) | (1,300) | ||
| Total Shareholders’ Equity | 129,080 | ||
| Total Liabilities and Shareholders’ Equity | 180,160 |
Explanation:
For preparing the balance sheet as per U.S. GAAP, we need to first include the Current Assets, and the the non current assets of the firm. Then add both to calculate the total assets. Then we need to include the Current Liabilities and then the Non current liabilities to get the total liabilties and then include the shareholders equity. This is the format for balance sheet as per US GAAP.
2. Assume instead that KIP uses IFRS. Prepare its balance sheet as of December 31, 2016.
Answer:
| KIP INTERNATIONAL PRODUCTS COMPANY | |||
| Balance Sheet | |||
| December 31, 2016 | |||
| Assets | |||
| Noncurrent Assets: | |||
| Investment in held-to-maturity bonds | 9,000 | ||
| Sinking fund for bond retirement | 7,600 | ||
| Land | 14,000 | ||
| Buildings | 68,100 | ||
| Less: Accumulated depreciation | (9,000) | 59,100 | |
| Equipment | 30,500 | ||
| Less: Accumulated depreciation | (9,000) | 21,500 | |
| Patents (net) | 3,400 | ||
| Total noncurrent assets | 114,600 | ||
| Current Assets: | |||
| Cash | 9,200 | ||
| Accounts receivable | 14,200 | ||
| Less: Allowance for doubtful accounts | (730) | 13,470 | |
| Inventory | 40,100 | ||
| Prepaid items: | |||
| Insurance | 840 | ||
| Office supplies | 1,950 | 2,790 | |
| Total current assets | 65,560 | ||
| Total Assets | 180,160 | ||
| Shareholders’ Equity | |||
| Contributed Capital: | |||
| Preferred stock $50 par | 10,500 | ||
| Common stock, $10 par | 13,000 | ||
| Additional paid-in capital on preferred stock | 1,680 | ||
| Additional paid-in capital on common stock | 7,300 | ||
| Total contributed capital | 32,480 | ||
| Retained earnings | 97,900 | ||
| Total contributed capital and retained earnings | 130,380 | ||
| Less: Treasury stock (at cost) . | (1,300) | ||
| Total Shareholders’ Equity . | 129,080 | ||
| Liabilities | |||
| Noncurrent Liabilities: | |||
| Bonds payable (due 2019). | 23,500 | ||
| Less: Discount on bonds payable |
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Accounts Payable
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Accounts Receivable
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Prepaid Insurance
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Dividends Payable
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