Question

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Corporation provided the following balance sheet for December 31 of the current year. Carson Corporation Balance...

Corporation provided the following balance sheet for December 31 of the current year.

Carson Corporation

Balance Sheet

At December 31

Assets

Current Assets:

Cash $600,000

Investments at Fair Value 685,000

Accounts Receivable 235,000

Merchandise Inventory 910,000

Total Current Assets $2,430,000

Noncurrent Assets:

Investments in Affiliate Companies $90,000

Property, Plant, and Equipment – net 3,350,000

Equipment Under Capital Lease 370,000

Intangible Assets – net 330,500

Total Noncurrent Assets $4,140,500

Total Assets $6,570,500

Liabilities

Current Liabilities:

Accounts Payable $505,000

Current Portion of Long–Term Debt 340,000

Dividends Payable 8,000

Income Taxes Payable 170,000

Total Current Liabilities $1,023,000

Noncurrent Liabilities:

Bonds Payable, Due in 20 Years $800,000

Notes Payable, Due in 10 Years 735,000

Obligations Under Capital Leases 290,000

Deferred Tax Liability 290,000

Obligations Under Pension Plans 606,000

Total Noncurrent Liabilities $2,721,000

Total Liabilities $3,744,000

Stockholders' Equity

Common stock, $1 Par Value $620,000

Additional Paid–in Capital 920,000

Retained Earnings 1,516,500

Accumulated Other Comprehensive Loss (230,000)

Total Stockholders' Equity $2,826,500

Total Liabilities and Stockholders' Equity $6,570,500

Requirement

Restructure the balance sheet for December 31 of the current year using the report format with the following change in​ assumptions:

1.

The investments at fair value are held in a noncurrent asset fund created for the purpose of liquidating​ long-term debt.

2.

The firm will use the earnings on fund investments to pay the current portion of​ long-term debt each year.

Solutions

Expert Solution

BALANCE SHEET AS ON DECEMBER 31,

Assets
Current Assets:
Cash $      600,000.00
Accounts Receivable $      235,000.00
Merchandise Inventory $      910,000.00
Total Current Assets $ 1,745,000.00
Non current Assets:
Investments at Fair Value $      685,000.00
Investments in Affiliate Companies $        90,000.00
Property, Plant, and Equipment $    3,350,000.00
Equipment Under Capital Lease $      370,000.00
Intangible Assets $      330,500.00
Total Noncurrent Assets $ 4,825,500.00
Total Assets $ 6,570,500.00
Liabilities and stockholders Equity
Current Liabilities:
Accounts Payable $      505,000.00
Current Portion of Long–Term Debt $      340,000.00
Dividends Payable $         8,000.00
Income Taxes Payable $      170,000.00
Total Current Liabilities $ 1,023,000.00
Noncurrent Liabilities:
Bonds Payable, Due in 20 Years $      800,000.00
Notes Payable, Due in 10 Years $      735,000.00
Obligations Under Capital Leases $      290,000.00
Deferred Tax Liability $      290,000.00
Obligations Under Pension Plans $      606,000.00
Total Noncurrent Liabilities $ 2,721,000.00
Stockholders Equity
Common stock, $1 Par Value $      620,000.00
Additional Paid–in Capital $      920,000.00
Retained Earnings $    1,516,500.00
Accumulated Other Comprehensive Loss $     (230,000.00)
Total Stockholders' Equity $ 2,826,500.00
Total Liabilities and Stockholders' Equity $ 6,570,500.00

ekkarill92 answered 1 year ago
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