Question

Problem 5-3

The adjusted trial balance of Indigo Company and other related information for the year 2017 are presented as follows.

INDIGO COMPANY ADJUSTED TRIAL BALANCE DECEMBER 31, 2017
	Debit		Credit
Cash	$   43,440
Accounts Receivable	165,940
Allowance for Doubtful Accounts			$    9,050
Prepaid Insurance	6,250
Inventory	210,940
Equity Investments (long-term)	341,440
Land	87,440
Construction in Progress (building)	126,440
Patents	36,000
Equipment	402,440
Accumulated Depreciation-Equipment			240,350
Discount on Bonds Payable	20,000
Accounts Payable			150,440
Accrued Liabilities			51,640
Notes Payable			96,440
Bonds Payable			202,440
Common Stock			502,440
Paid-in Capital in Excess of Par-Common Stock			45,000
Retained Earnings			142,530
	$1,440,330		$1,440,330

Additional information:

1.		The LIFO method of inventory value is used.
2.		The cost and fair value of the long-term investments that consist of stocks and bonds is the same.
3.		The amount of the Construction in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $87,440, as shown in the trial balance.
4.		The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis.
5.		Of the discount on bonds payable, $2,000 will be amortized in 2018.
6.		The notes payable represent bank loans that are secured by long-term investments carried at $122,440. These bank loans are due in 2018.
7.		The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2028.
8.		600,000 shares of common stock of a par value of $1 were authorized, of which 502,440 shares were issued and outstanding.

Prepare a balance sheet as of December 31, 2017, so that all important information is fully disclosed. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Building and Equipment. Enter account name only and do not provide the descriptive information provided in the question.)

Answer 1

Indigo Company Balancesheet December 31, 2017
Assets
Current Assets
Cash		43,440
Accounts Receivable	165,940
Less:Allowances for doubtful accounts	9,050	156,890
Inventory (LIFO)		210,940
Prepaid Insurance		6,250
Total Current Assets			417,520
Long-Term Investments
Equity Investments			341,440
Plant, Property and Equipment
Land		87,440
Construction in progress		126,440
Equipment	402,440
Less:Accumulated Depriciation	240,350	162,090
Total plant, property and equipmment			375,970
Intangible Assets
Patents			36,000
Total Assets			1,170,930
Liabilities and Stockholders’ Equity
Current Liabilities
Notes Payable	96440
Less: Discount on Notes Payable	20000	76440
Accounts payable		150,440
Bonds payable		202,440
Accrued expense		51,640
Total current liabilities			480960
Long Term Debt
8%, 2028
Stockholders’ Equity
Paid in capital in Excess of Par Common Stock		45000
Common Stock		502,440
Retained Earnings		142,530
Total Stockholders’ Equity			689970
total Liability and Stockholders’ Equity			1170930