Question

The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation.

Account Title	Debits		Credits
Cash	42,000
Accounts receivable	90,000
Inventories	115,000
Interest payable			27,000
Marketable securities	78,000
Land	154,000
Buildings	385,000
Accumulated depreciation—buildings			117,000
Equipment	109,000
Accumulated depreciation—equipment			42,000
Copyright (net of amortization)	29,000
Prepaid expenses (next 12 months)	49,000
Accounts payable			82,000
Deferred revenues (next 12 months)			37,000
Notes payable			335,000
Allowance for uncollectible accounts			7,000
Common stock			370,000
Retained earnings			34,000
Totals	1,051,000		1,051,000

Additional information:

The $154,000 balance in the land account consists of $117,000 for the cost of land where the plant and office buildings are located. The remaining $37,000 represents the cost of land being held for speculation.

The $78,000 in the marketable securities account represents an investment in the common stock of another corporation. Valley intends to sell one-half of the stock within the next year.

The notes payable account consists of a $134,000 note due in six months and a $201,000 note due in three annual installments of $67,000 each, with the first payment due in August of 2019.

Required:
Prepare a classified balance sheet for the Valley Pump Corporation at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

SOLUTION

VALLEY PUMP CORPORATION

Balance Sheet

At December 31, 2018

	Amount ($)	Amount ($)
ASSETS:
Current assets:
Cash	42,000
Marketable securities (78,000 /2)	39,000
Accounts receivable, net of allowance for uncollectible accounts of $7,000	83,000
Inventories	115,000
Prepaid expenses	49,000
Total current assets		328,000
Investments:
Marketable securities	39,000
Land	37,000
Total investments		76,000
Property, plant, and equipment:
Land	117,000
Buildings	385,000
Equipment	109,000
	611,000
Less: Accumulated depreciation (117,000 + 42,000)	(159,000)
Net property, plant, and equipment		452,000
Intangible assets:
Copyright		29,000
Total assets		885,000
LIABILITIES AND SHAREHOLDER'S EQUITY:
Current liabilities:
Accounts payable	82,000
Interest payable	27,000
Unearned revenues	37,000
Note payable	134,000
Current maturities of long-term debt	67,000
Total current liabilities		347,000
Long-term liabilities:
Note payable		134,000
Shareholders’ equity:
Common stock	370,000
Retained earnings	34,000
Total shareholders’ equity		404,000
Total liabilities and shareholders’ equity		885,000