ABC Company reported the following account balances at December 31, 2019: Accounts receivable ......... $33,000 Equipment...

ABC Company reported the following account balances at December 31, 2019: Accounts receivable ......... $33,000 Equipment ................... $47,000 Notes payable ............... $15,000 Utilities expense ........... $23,000 Dividends ................... $18,000 Trademark ................... $16,000 Retained earnings ........... $58,000 (at January 1, 2019) Rental revenue .............. $19,000 Land ........................ ? Cost of goods sold .......... $36,000 Supplies .................... $21,000 Accumulated depreciation .... $11,000 Income tax expense .......... $12,000 Common stock ................ $94,000 Copyright ................... ? Utilities payable ........... $13,000 Sales revenue ............... $90,000 Cash ........................ $19,000 Mortgage payable ............ $17,000 Advertising expense ......... $10,000 Inventory ................... ? Accounts payable ............ $47,000 The following additional information is available: 1. The total P-P-E at December 31, 2019 was equal to 140% of the total current liabilities at December 31, 2019. 2. Total current assets at December 31, 2019 amounted to $111,000. 3. The note payable was a 3-year loan taken out on March 1, 2017. 4. The mortgage payable was a 15-year loan taken out on May 1, 2010. Calculate the balance in the copyright account at December 31, 2019.

Expert Solution

Solution:

Computation of net income
For year ended December 31, 2019
Particulars	Amount
Sales revenue	$90,000.00
Cost of goods sold	$36,000.00
Gross Profit	$54,000.00
Add: Rental revenue	$19,000.00
Less: Expenses:
Utilities expense	$23,000.00
Advertising expense	$10,000.00
Income before taxes	$40,000.00
Les: Income tax expense	$12,000.00

Net Income	$28,000.00

Ending retained earnings = Beginning retained earnings + Net income - Dividend

= $58,000 + $28,000 - $18,000 = $68,000

Current liabilities = Notes payable + Utilities payable + Accounts payable

= $15,000 + $13,000 + $47,000 = $75,000

Long term liabilities = Mortgage payable = $17,000

Stockholder's equity = Common stock + Retained earnings = $94,000 + $68,000 = $162,000

Total liabilities and stockholder's equity = $75,000 + $17,000 + $162,000 = $254,000

Property plant and equipment = 140% of current liabilities = $75,000 * 140% = $105,000

Total current assets = $111,000

Total intangible assets = Total liabilities and stockholder's equity - Total PPE - Current assets

= $254,000 - $105,000 - $111,000 = $38,000

Copyright = Total intangible assets - Trademark = $38,000 - $16,000 = $22,000

ekkarill92 answered 2 years ago

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