Question

Problem 5-5 Presented below is the balance sheet of Sargent Corporation for the current year, 2017. MARIGOLD CORPORATION BALANCE SHEET DECEMBER 31, 2017 Current assets $ 488,150 Current liabilities $ 383,150 Investments 643,150 Long-term liabilities 1,003,150 Property, plant, and equipment 1,723,150 Stockholders’ equity 1,773,150 Intangible assets 305,000 $3,159,450 $3,159,450 The following information is presented. 1. The current assets section includes cash $153,150, accounts receivable $173,150 less $13,150 for allowance for doubtful accounts, inventories $183,150, and unearned rent revenue $8,150. Inventory is stated on the lower-of-FIFO-cost-or-market. 2. The investments section includes the cash surrender value of a life insurance contract $43,150; investments in common stock, short-term $83,150 and long-term $273,150; and bond sinking fund $243,700. The cost and fair value of investments in common stock are the same. 3. Property, plant, and equipment includes buildings $1,043,150 less accumulated depreciation $363,150, equipment $453,150 less accumulated depreciation $183,150, land $503,150, and land held for future use $270,000. 4. Intangible assets include a franchise $168,150, goodwill $103,150, and discount on bonds payable $33,700. 5. Current liabilities include accounts payable $143,150, notes payable-short-term $83,150 and long-term $123,150, and income taxes payable $33,700. 6. Long-term liabilities are composed solely of 7% bonds payable due 2025. 7. Stockholders’ equity has preferred stock, no par value, authorized 200,000 shares, issued 73,150 shares for $438,900, and common stock, $1.00 par value, authorized 400,000 shares, issued 103,150 shares at an average price of $10. In addition, the corporation has retained earnings of $302,750. Prepare a balance sheet in good form, adjusting the amounts in each balance sheet classification as affected by the information given above. (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.) MARIGOLD CORPORATION Balance Sheet Assets $ $ : $ : : $ Liabilities and Stockholders' Equity $ $ $ : $

Answer 1

MARIGOLD CORPORATION
Balance Sheet
December 31, 2014
Current Assets
Cash		$153,150
Trading securities (at fair value)		$83,150
Accounts receivable	$173,150
Less: Allowance for doubtful accounts	-$13,150	$160,000
Inventory (lower-of-average-cost-or-market)		$183,150
Total current assets			$579,450
Long Term Investments
Investments in common stock (at fair value)		$273,150
Bond sinking fund		$243,700
Cash surrender value of life insurance		$43,150
Land held for future use		$270,000	$830,000
Property, plant, and equipment
Land		$503,150
Building	$1,043,150
Less: Accum. depreciation—building	-$363,150	$680,000
Equipment	$453,150
Less: Accum. depreciation—equipment	-$183,150	$270,000	$1,453,150
Intangible assets
Patent		$168,150
Goodwill		$103,150	$271,300
Total assets			$3,133,900
Liabilities and Stockholders’ Equity
Accounts Payable		$143,150
Notes Payable		$83,150
Taxes Payable		$33,700
Unearned revenue		$8,150
Total current liabilities			$268,150
Long-term liabilities
Notes payable			$123,150
7% bonds payable, due 2025		$1,003,150
Less: Discount on bonds payable		-$33,700	$969,450
Total liabilities			$1,360,750
Stockholders’ equity
Capital stock
Preferred stock, no par value 200,000 shares authorized ,73,150 issued and outstanding		$438,900
Common stock, $1 par value; 400,000 shares authorized, 103,150 issued and outstanding		$103,150
Paid-in capital in excess of par on common stock (103150 X [$10 – $1.00)]		$928,350
Retained earnings		$302,750
Total stockholders’ equity			$1,773,150
Total liabilities and stockholders’ equity			$3,133,900