Question

Here are selected items from Corona Co.’s Trial Balance (not all items are presented so it does not have to balance) as of December 31, 2020. The point of this problem is to see if you can put things in their proper place and leave them out if they do not belong on the parts of the Balance Sheet you are asked about below.

	Debit	Credit
Cash	600,000
Sales Revenue		$24,000,000
Debt Investments (trading) (at cost, $400,000)	400,000
Cost of Goods Sold	14,000,000
Debt Investments (long-term)	1,000,000
Equity Investments (long-term)	800,000
Notes Payable (short-term)		300,000
Accounts Payable		1,400,000
Selling Expenses	6,000,000
Investment Revenue		200,000
Land	800,000
Buildings	3,200,000
Dividends Payable		400,000
Accrued Liabilities		300,000
Accounts Receivable	1,300,000
Accumulated Depreciation–Buildings		450,000
Allowance for Doubtful Accounts		80,000
Administrative Expenses	2,500,000
Interest Expense	600,000
Inventory	1,800,000
Gain		200,000
Notes Payable (long-term)		3,000,000
Equipment	1,800,000
Bonds Payable		3,000,000
Accumulated Depreciation–Equipment		1,800,000
Franchises	500,000
Common Stock ($5 par)		1,500,000
Treasury Stock	287,000
Patents	500,000
Retained Earnings		117,000
Paid-in Capital in Excess of Par		120,000

Instructions

Compute each of the following:

1.   Total current assets

2.   Total property, plant, and equipment

3.   Total assets

4.   Total liabilities

Answer 1

Solution:

1. Calculation of Total Current Assets:

Cash = $600,000

Debt Investments (trading) = $400,000

Accounts Receivable (Net) = $1,300,000 - $80,000 = $1,220,000

Inventory = $1,800,000

Total Current Assets = $600,000 + $400,000 + $1,220,000 + $1,800,000 = $4,020,000

2. Calculation of Total Plant, Property and Equipment:

Land = $800,000

Buildings (Net) = $3,200,000 – $450,000 = $2,750,000

Equipment (Net) = $1,800,000 - $1,800,000 = $0

Total Plant, Property and Equipment = $800,000 + $2,750,000 + $0 = $3,550,000

3. Calculation of Total Assets:

Total Current Assets = $4,020,000

Total Plant, Property and Equipment = $3,550,000

Debt Investments (Long-term) = $1,000,000

Equity Investments (Long-term) = $800,000

Franchises (Intangible Asset) = $500,000

Patents = $500,000

Total Assets = $4,020,000 + $3,550,000 + $1,000,000 + $800,000 + $500,000 + $500,000 = $10,370,000

4. Calculation of Total Liabilities:

Notes Payable (short term) = $300,000

Accounts Payable = $1,400,000

Dividends Payable = $400,000

Accrued Liabilities = $300,000

Gain = $200,000

Notes Payable (long term) = $3,000,000

Bonds Payable = $3,000,000

Common Stock (less Treasury Stock) = $1,500,000 - $287,000 = $1,213,000

Retained Earnings = $117,000

Paid-in Capital in Excess of Par = $120,000

Total Liabilities = $300,000 + $1,400,000 + $400,000 + $300,000 + $200,000 + $3,000,000 + $3,000,000 + 1,213,000 + $117,000 + $120,000 = $10,050,000