Question

The following is a December 31, 2018, post-closing trial balance for Georgetown, Inc. .

Account Title		Debits			Credits
Cash	$	45,000
Investments		110,000
Accounts receivable		60,000
Inventories		200,000
Prepaid insurance (for the next 9 months)		9,000
Land		90,000
Buildings		420,000
Accumulated depreciation—buildings				$	100,000
Equipment		110,000
Accumulated depreciation—equipment					60,000
Patents (net of amortization)		10,000
Accounts payable					75,000
Notes payable					130,000
Interest payable					20,000
Bonds Payable					240,000
Common stock					300,000
Retained earnings					129,000
Totals	$	1,054,000		$	1,054,000

Additional information:

1. The investment account includes an investment in common stock of another corporation of $30,000 which management intends to hold for at least three years. The balance of these investments is intended to be sold in the coming year.
2. The land account includes land which cost $25,000 that the company has not used and is currently listed for sale.
3. The cash account includes $15,000 restricted in a fund to pay bonds payable that mature in 2021 and $23,000 restricted in a three-month Treasury bill.
4. The notes payable account consists of the following:

1. a $30,000 note due in six months.
2. a $50,000 note due in six years.
3. a $50,000 note due in five annual installments of $10,000 each, with the next installment due February 15, 2019.

5. The $60,000 balance in accounts receivable is net of an allowance for uncollectible accounts of $8,000.
6. The common stock account represents 100,000 shares of no par value common stock issued and outstanding. The corporation has 500,000 shares authorized.

Required:
Prepare a classified balance sheet for Georgetown as of December 31, 2018.

Answer 1

Solution :-

Georgetown, Inc. Balance sheet At December 31, 2018
Cash	= $45,000 - $15,000 = $30,000
Short - term investments	= $110,000 - $30,000 = $80,000
Accounts receivables	$60,000
Inventories	$200,000
Prepaid insurance	$9,000
Total current assets	= $30,000 + $80,000 + $60,000 + $200,000 + $90,000 = $379,000
Investments :-
Marketable securities	$30,000
Land held for sale	$25,000
Bond sinking fund	$15,000
Total investment	= $30,000 + $25,000 + $15,000 = $70,000
Property , plant & Equipment :
Land	= $90,000 - $25,000 = $65,000
Buildings	$420,000
Equipment	$110,000
Total	= $65,000 + $420,000 + $110,000 = $595,000
Accumulated depreciation	$100,000 + $60,000 = $160,000
Net property , plant & equipment	= $595,000 - $160,000 = $435,000
Intangible Assets :-
Patents	$10,000
Total Assets	= $379,000 + $435,000 + $70,000 + $10,000 = $ 894,000
Current liabilities :-
Account payable	$75,000
Interest payable	$20,000
Note payable	$30,000
Current maturities of long- term debt	$10,000
Total current liabilities	= $75,000 + $20,000 + $30,000 + $10,000 = $135,000
Long term liabilities :-
Notes payable	$90,000
Bonds payable	$240,000
Total long term liabilities	= $90,000 + $240,000 = $330,000
Shareholder's equity :-
Common stock no per value 500,000 shares
Authorized 100,000 shares issued & outstanding	$300,000
Retained earnings	$129,000
Total share holder's equity	= $300,000 + $129,000 = $429,000
Total liabilities and shareholder's equity	= $135,000 + $330,000 + $429,000 = $894,000