Topic No.

1: (Balance Sheet)
Question No. 1
Presented below is a list of accounts in alphabetical order.
Accounts Receivable InventoryEnding
Cash (on hand) Preferred Stock
Accumulated DepreciationBuildings Land
Cash Surrender Value of Life Insurance
Accumulated DepreciationEquipment Land
Premium on Bonds Payable
for Future Plant Site
Commission Expense Prepaid Rent
Accumulated Other Comprehensive Income
Common Stock Purchase Returns and
Loss from Flood
Allowances
Advances to Employees Non-controlling
Copyrights Purchases
Interest
Debt Investments (trading) Retained Earnings
Advertising Expense Notes Payable (due next
Dividends Payable Salaries and Wages
year)
Expense (sales)
Allowance for Doubtful Accounts Paid-in
Equipment Salaries and Wages Payable
Capital in Excess of ParPreferred Stock
Freight-In Sales Discounts
Bond Sinking Fund Patents
Gain on Disposal of Equipment Sales Revenue
Bonds Payable Payroll Taxes Payable
Interest Receivable Treasury Stock (at cost)
Buildings Pension Liability
InventoryBeginning
Unearned
Cash (in bank) Petty Cash
Subscriptions Revenue
Instructions
Prepare a classified balance sheet in good form. (No monetary amounts are to be shown.)

Question No. 2:
Uhura Company has decided to expand its operations. The bookkeeper recently completed the balance
sheet presented below in order to obtain additional funds for expansion.

Instructions
Prepare a revised balance sheet given the available information. Assume that the accumulated
depreciation balance for the buildings is $160,000 and for the equipment, $105,000. The allowance for
doubtful accounts has a balance of $17,000. The pension obligation is considered a long-term liability.

Question No. 3:
The adjusted trial balance of Eastwood Company and other related information for the year 2014 are
presented as follows.

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 $85,000, 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 2015.
6. The notes payable represent bank loans that are secured by long-term investments carried at
$120,000. These bank loans are due in 2015.
7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2025.
8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were
issued and outstanding.
Instructions
Prepare a balance sheet as of December 31, 2014, so that all important information is fully disclosed.

Question No. 4:
Presented below is the balance sheet of Sargent Corporation for the current year, 2014.

The following information is presented.

1. The current assets section includes cash $150,000, accounts receivable $170,000 less $10,000 for
allowance for doubtful accounts, inventories $180,000, and unearned rent revenue $5,000. Inventoy is
stated on the lower-of-FIFO-cost-or-market.
2. The investments section includes the cash surrender value of a life insurance contract $40,000;
investments in common stock, short-term (trading) $80,000 and long-term (available-for-sale) $270,000;
and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same.
3. Property, plant, and equipment includes buildings $1,040,000 less accumulated depreciation
$360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held
for future use $270,000.
4. Intangible assets include a franchise $165,000; goodwill $100,000; and discount on bonds payable
$40,000.
5. Current liabilities include accounts payable $140,000; notes payableshort-term $80,000 and long
term $120,000; and income taxes payable $40,000.
6. Long-term liabilities are composed solely of 7% bonds payable due 2022.
7. Stockholders equity has preferred stock, no par value, authorized 200,000 shares, issued 70,000
shares for $450,000; and common stock, $1.00 par value, authorized 400,000 shares, issued 100,000
shares at an average price of $10. In addition, the corporation has retained earnings of $320,000.
Instructions
Prepare a balance sheet in good form, adjusting the amounts in each balance sheet classification as
affected by the information given above.

Question No. 5:
The balance sheet of Kishwaukee Corporation as of December 31, 2014, is as follows.

Note 1: Buildings are stated at cost, except for one building that was recorded at appraised value. The
excess of appraisal value over cost was $570,000. Depreciation has been recorded based on cost.
Note 2: Goodwill in the amount of $120,000 was recognized because the company believed that book
value was not an accurate representation of the fair value of the company. The gain of $120,000 was
credited to Retained Earnings.
Note 3: Notes payable are long-term except for the current installment due of $100,000.
Instructions
Prepare a corrected classified balance sheet in good form. The notes above are for information only.

Question No. 6:
Presented below is the trial balance of Scott Butler Corporation at December 31, 2014.

Instructions
Prepare a balance sheet at December 31, 2014, for Scott Butler Corporation. (Ignore income taxes.)

Question No. 7:
The bookkeeper for Geronimo Company has prepared the following balance sheet as of July 31, 2014.

The following additional information is provided.

1. Cash includes $1,200 in a petty cash fund and $15,000 in a bond sinking fund.
2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable
$44,000 and (b) allowance for doubtful accounts $3,500.
3. Inventory costing $5,300 was shipped out on consignment on July 31, 2014. The ending inventory
balance does not include the consigned goods. Receivables in the amount of $5,300 were recognized on
these consigned goods.
4. Equipment had a cost of $112,000 and an accumulated depreciation balance of $28,000.
5. Income taxes payable of $6,000 were accrued on July 31. Geronimo Company, however, had set up a
cash fund to meet this obligation. This cash fund was not included in the cash balance but was offset
against the income taxes payable amount.
Instructions
Prepare a corrected classified balance sheet as of July 31, 2014, from the available information,
adjusting the account balances using the additional information.

Question No. 8:
The current assets and current liabilities sections of the balance sheet of Allessandro Scarlatti Company
appear as follows.

The following errors in the corporations accounting have been discovered:

1. January 2015 cash disbursements entered as of December 2014 included payments of accounts
payable in the amount of $39,000, on which a cash discount of 2% was taken.
2. The inventory included $27,000 of merchandise that had been received at December 31 but for which
no purchase invoices had been received or entered. Of this amount, $12,000 had been received on
consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
3. Sales for the first four days in January 2015 in the amount of $30,000 were entered in the sales
journal as of December 31, 2014. Of these, $21,500 was sales on account and the remainders were cash
sales.
4. Cash, not including cash sales, collected in January 2015 and entered as of December 31, 2014,
totaled $35,324. Of this amount, $23,324 was received on account after cash discounts of 2% had been
deducted; the remainder represented the proceeds of a bank loan.
Instructions
(a) Restate the current assets and current liabilities sections of the balance sheet in accordance with
good accounting practice. (Assume that both accounts receivable and accounts payable are recorded
gross.)
(b) State the net effect of your adjustments on Allessandro Scarlatti Companys retained earnings
balance.
Question No. 9
Norma Smith is the controller of Baylor Corporation and is responsible for the preparation of the yearend financial statements. The following transactions occurred during the year.

(a) On December 20, 2014, a former employee filed a legal action against Baylor for $100,000 for
wrongful dismissal. Management believes the action to be frivolous and without merit. The likelihood of
payment to the employee is remote.
(b) Bonuses to key employees based on net income for 2014 are estimated to be $150,000.
(c) On December 1, 2014, the company borrowed $600,000 at 8% per year. Interest is paid quarterly.
(d) Credit sales for the year amounted to $10,000,000. Baylors expense provision for doubtful accounts
is estimated to be 3% of credit sales.
(e) On December 15, 2014, the company declared a $2.00 per share dividend on the 40,000 shares of
common stock outstanding, to be paid on January 5, 2015.
(f) During the year, customer advances of $160,000 were received; $50,000 of this amount was earned
by December 31, 2014.
Instructions
For each item above, indicate the dollar amount to be reported as a current liability. If a liability is not
reported, explain why.