Question

The following statement of financial position was prepared by the bookkeeper for Kraus Company as of December 31, 2019.

Kraus Company

Statement of Financial Position

as of December 31, 2019

Investments                                £ 76,300              Equity                                                  £215,500

Equipment (net)                             96,000            Non-current liabilities                            100,000

Patents                                            32,000            Accounts payable                                     78,000

Inventories                                     57,000           

Accounts receivable (net)                52,200           

Cash                                               80,000                                                                       

                                                   £393,500                                                                        £393,500

The following additional information is provided:

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

2.   Equipment costing £5,000 with accumulated depreciation £4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is £40,000.

Instructions

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

Answer 1

Solution

Kraus Company

Statement of Financial Position

As of December 31, 2019

Assets

Investments £ 76,300

  Property, plant, and equipment

      Equipment                                                                    £  135,000     (1)

            Less accumulated depreciation                                 £ 40,000                    £ 95,000

Intangible assets

      Patents £ 32,000

Current assets

      *Equipment held for sale                                                   £ 1,000     (2)

      Inventories                                                                        £ 62,000     (3)

      Accounts receivable £ 47,200 (4)

      Cash £ 80,000

            Total current assets                                                                               £ 190,200

            Total assets £393,500

Equity and Liabilities

Shareholders' equity                                                                                        £ 215,500

Non-current liabilities £100,000

Current liabilities

      Accounts payable £ 78,000

   Total current liabilities £ 178,000

Total Liabilities    £ 393,500

(1) (£96,000 + £40,000 – £5,000 + £4,000) = 135,000

(2) (£5,000 – £4,000) = 1,000

(3) (£57,000 + £5,000) = 62,000

(4)   (£52,200 - £5,000) = 47,200

*An alternative is to show it as an other asset.

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