The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the company’s controller....

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Accounting

The following incomplete balance sheet for the SandersonManufacturing Company was prepared by the company’s controller. Asaccounting manager for Sanderson, you are attempting to reconstructand revise the balance sheet.
SANDERSON MANUFACTURING COMPANY
Balance Sheet
AtDecember 31, 2018
($in 000s)
Assets
Current assets:
Cash $ 2,350
Accounts receivable 5,700
Allowance for uncollectibleaccounts (1,500 )
Finished goods inventory 7,100
Prepaid expenses 2,300
Total current assets 15,950
Long-term assets:
Investments 4,100
Raw materials and work inprocess inventory 3,350
Equipment 20,000
Accumulateddepreciation—equipment (5,300 )
Patent ?
Total assets $ ?
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 6,300
Note payable 6,200
Interest payable—note 1,200
Deferred revenue 5,200
Total current liabilities 18,900
Long-term liabilities:
Bonds payable 6,600
Interest payable—bonds 500
Shareholders’ equity:
Common stock $ ?
Retained earnings ? ?
Total liabilities andshareholders’ equity ?

Additional information ($ in 000s):
Certain records that included the account balances for thepatent and shareholders’ equity items were lost. However, thecontroller told you that a complete, preliminary balance sheetprepared before the records were lost showed a debt to equity ratioof 1.3. That is, total liabilities are 130% of total shareholders’equity. Retained earnings at the beginning of the year was $6,200.Net income for 2018 was $2,100 and $500 in cash dividends weredeclared and paid to shareholders.
Management intends to sell the investments in the next sixmonths.
Interest on both the note and the bonds is payable annually.
The note payable is due in annual installments of $1,550each.
Deferred revenue will be recognized as revenue equally over thenext two fiscal years.
The common stock represents 500,000 shares of no par stockauthorized, 360,000 shares issued and outstanding.
Required:
Prepare a complete, corrected, classified balance sheet.(Amounts to be deducted should be indicated by a minussign.)

Answer & Explanation Solved by verified expert

3.7 Ratings (474 Votes)

Assets
Current assets:
Cash	2,350
Accounts receivable	5,700
Allowance for uncollectible accounts	-1500
Finished goods inventory	7,100
Prepaid expenses	2,300
Investment	4100
Total current assets	20,050
Long-term assets:
Raw materials and work in process inventory	3,350
Equipment	20,000
Accumulated depreciation—equipment	-5300
Patent	7900	(46000-38100)
Total assets	46,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	6,300
Notes payable	1,550
Interest payable—note	1,200
Interest payable—bonds	500
Deferred revenue	2,600
Total current liabilities		12,150
Long-term liabilities:
Bonds payable		6,600
Notes payable		4650	(6200-1550)
Deferred revenue		2600	(5200/2)
Shareholders’ equity:
Common stock	12200
Retained earnings	7800	20000
Total liabilities and shareholders’ equity		46,000
Total liabilities	26000	(18900+6600+500)
Stockholders equity	20000	(26000/1.3)

Retained earnings
Beginning	6200
net income	2100
Dividend	-500
Ending	7800

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Transcribed Image Text

The following incomplete balance sheet for the SandersonManufacturing Company was prepared by the company’s controller. Asaccounting manager for Sanderson, you are attempting to reconstructand revise the balance sheet.SANDERSON MANUFACTURING COMPANYBalance SheetAtDecember 31, 2018($in 000s)AssetsCurrent assets:Cash$2,350Accounts receivable5,700Allowance for uncollectibleaccounts(1,500)Finished goods inventory7,100Prepaid expenses2,300Total current assets15,950Long-term assets:Investments4,100Raw materials and work inprocess inventory3,350Equipment20,000Accumulateddepreciation—equipment(5,300)Patent?Total assets$?Liabilities and Shareholders’ EquityCurrent liabilities:Accounts payable$6,300Note payable6,200Interest payable—note1,200Deferred revenue5,200Total current liabilities18,900Long-term liabilities:Bonds payable6,600Interest payable—bonds500Shareholders’ equity:Common stock$?Retained earnings??Total liabilities andshareholders’ equity?Additional information ($ in 000s):Certain records that included the account balances for thepatent and shareholders’ equity items were lost. However, thecontroller told you that a complete, preliminary balance sheetprepared before the records were lost showed a debt to equity ratioof 1.3. That is, total liabilities are 130% of total shareholders’equity. Retained earnings at the beginning of the year was $6,200.Net income for 2018 was $2,100 and $500 in cash dividends weredeclared and paid to shareholders.Management intends to sell the investments in the next sixmonths.Interest on both the note and the bonds is payable annually.The note payable is due in annual installments of $1,550each.Deferred revenue will be recognized as revenue equally over thenext two fiscal years.The common stock represents 500,000 shares of no par stockauthorized, 360,000 shares issued and outstanding.Required:Prepare a complete, corrected, classified balance sheet.(Amounts to be deducted should be indicated by a minussign.)

SANDERSON MANUFACTURING COMPANY
Balance Sheet
AtDecember 31, 2018
($in 000s)
Assets
Current assets:
Cash			$	2,350
Accounts receivable				5,700
Allowance for uncollectibleaccounts				(1,500	)
Finished goods inventory				7,100
Prepaid expenses				2,300
Total current assets				15,950
Long-term assets:
Investments				4,100
Raw materials and work inprocess inventory				3,350
Equipment				20,000
Accumulateddepreciation—equipment				(5,300	)
Patent				?
Total assets			$	?
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable			$	6,300
Note payable				6,200
Interest payable—note				1,200
Deferred revenue				5,200
Total current liabilities				18,900
Long-term liabilities:
Bonds payable				6,600
Interest payable—bonds				500
Shareholders’ equity:
Common stock	$	?
Retained earnings		?		?
Total liabilities andshareholders’ equity				?