Question

The following statement of financial position was prepared by Peter Quill, bookkeeper for Nova Corp.at December 31, 2018.

Nova Corp.

Statement of Financial Position

December 31, 2018

                Cash                                                       $ 90,000                      Accounts payable                                                                       $ 75,000

Accounts receivable (net)	52,200		Long-term liabilities	110,000
Inventories	57,000		Shareholders’ equity	208,500
Investments	76,300
Equipment (net)	86,000
Patents	32,000

                                                                               $393,500                     $393,500

The following additional information is provided:

- “Cash” includes prepaid insurance of $9,400; as well, a bank overdraft of $1,500 has been deducted.

- The net accounts receivable balance includes:

a. accounts receivable—debit balances $62,000;

b. accounts receivable—credit balances $5,000;

c. allowance for doubtful accounts $4,800.

- Inventories do not include goods costing $5,000 shipped out on consignment. Receivables of $5,000 were recorded on these goods.

- Investments include investments in common shares, trading $24,000 and long-term $43,300, and franchises $9,000.

- Equipment costing $8,000 with accumulated depreciation $6,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.

Required

1. Prepare a statement of financial position in good form (shareholders’ equity details can be omitted.)

Answer 1

ASSETS
Investments:
Available for sale securities			43300
Property, plant and equipment:
Equipment (86000+46000-8000)		124000
Less: Acccumulated depreciation		40000	84000
Intangible assets:
Patents		32000
Franchises		9000	41000
Current Assets:
Equipment held for sale (8000-6000)		2000
Inventories (57000+5000)		62000
Accounts receivable (62000-5000)	57000
Less: Allowance for doubtful accounts	4800	52200
Trading securities		24000
Prepaid insurance		9400
Cash (90000-9400+1500)		82100
Total current assets			231700
Total assets			400000
EQUITY AND LIABILITIES
Shareholders' equity			208500
Non-current liabilities		110000
Current liabilities:
Accounts payable (75000+5000)	80000
Bank overdraft	1500
Total current liabilities		81500
Total liabilities			191500
Total liabilities and shareholders' equity			400000