Question

The following balance sheet, which has some weaknesses in terminology and classification, has been prepared by an inexperienced accountant and submitted to you for review:

Mikeska Company
Balance Sheet as of December 31, 2017 ($ in thousands)
Assets
Fixed assets—tangible
Land	$	500
Buildings and equipment		200
Less: Reserve for depreciation		(50	)	$	650
Factory supplies					20
Current assets
Inventory		163
Accounts receivable		102
Cash		68			333
Fixed assets—intangibles
Patents		51
Goodwill		49			100
Deferred charges
Discount on bonds payable		12
Returnable containers		32			44
Total assets				$	1,147
Liabilities
Current liabilities
Accounts payable		140
Allowance for doubtful accounts		7
Wages payable		195		$	342
Long-term liabilities
Bonds payable		400
Reserve for contingencies		50			450
Equity
Capital stock, $10 par, 5,000 shares issued and outstanding		50
Capital surplus		75
Earned surplus		270
Dividends paid		(40	)		355
Total liabilities				$	1,147

Required:
Prepare a classified balance sheet in proper form. Make any necessary corrections.

Answer 1

Mikeska Company
Balance Sheet
December 31, 2017
Assets
Current Assets:
Cash		68
Accounts receivable (102 - 7)		95
Inventory		163
Factory Supplies		20
Returnable containers		32
Total current assets			378
Property, plant and equipment:
Land		500
Buildings and equipment	200
Less: Acc. Dep.	50	150
Total Property, plant, and equipment			650
Intangibles Assets:
Patents		51
Goodwill		49
Total Intangibles Assets:			100
Total Assets			1,128
Liabilities
Current Liabilities:
Accounts Payable	140
Wages Outstanding	195
Total Current Liabilities		335
Long-term Liabilities
Bonds Payable		388
Reserve for contingencies		50
Total liabilities			773
Shareholders' Equity
Capital stock, $10 par, 5,000 shares issued and outstanding		50
Capital surplus		75
Earned surplus		230
Total Shareholders' Equity			355
Total Liabilities and Equity			1,128