Question

Problem 5-2 Presented below are a number of balance sheet items for Ayayai, Inc., for the current year, 2017. Goodwill Payroll Taxes Payable Bonds payable Discount on bonds payable Cash Land Notes receivable Notes payable (to banks) Accounts payable Retained earnings Income taxes receivable Notes payable (long-term) $ 129,170 Accumulated Depreciation-Equipment 181,761 Inventory 304,170 Rent payable (short-term) 15,100 Income taxes payable 364,170 Rent payable (long-term) 484,170 Common stock, $1 par value 449,870 Preferred stock, $10 par value 269,170 Prepaid expenses 494,170 Equipment ? Equity investments (trading) 101,800 Accumulated Depreciation-Buildings 1,604,170 Buildings $ 292,100 243,970 49,170 102,532 484,170 204,170 154,170 92,090 1,474,170 125,170 270,300 1,644,170 Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of equity investments (trading) are the same. (List Current Assets in order of liquidity. List Property, plant and Equipment in order of Land, Building and Equipment.)

Answer 1

Answer
MONTOYA, INC.
Balance Sheet
December 31, 2017
Assets
Current assets
Cash				$        364,170
Equity Investments (Trading)				$        125,170
Notes Receivable				$        449,870
Income Taxes Receivable				$        101,800
Inventory				$        243,970
Prepaid Expenses				$          92,090
Total current assets					$     1,377,070
Property, plant, and equipment
Land				$        484,170
Buildings			$     1,644,170
Less: Accum Deprec - Buildings			$        270,300	$     1,373,870
Equipment			$     1,474,140
Less: Accum Deprec - Equipment			$        292,100	$     1,182,040
					3,040,080
Intangible assets
Goodwill					$        129,170
Total assets					$     4,546,320
Liabilities and Shareholders’ Equity
Current liabilities
Accounts Payable				$        494,170
Notes Payable to Banks				$        269,170
Payroll Taxes Payable				$        181,761
Income Tax Payable				$        102,532
Rent Payable - Short-term				$          49,170
Total current liabilities					$     1,096,803
Long-term liabilities
Unsecured Notes Payable (Long-term)				$     1,604,170
Bonds Payable			$        304,170
Less: Discount on Bonds Payable			$          15,100	$        289,070
Rental Payable Long-term				$        484,170	$     2,377,410
Total liabilities					$     3,474,213
Shareholders’ equity
Capital Stock
Preferred stock, $10 par; 20,000 shares authorized, 15,417 shares issued
			$        154,170
Common stock, $1 par; 400,000 shares authorized, 200,000 issued
			$        204,170	$        358,340
Retained Earnings ($1,063,897 - $350,000)				$        713,767
Total shareholders’ equity ($4,546,320-3,474,213)					$     1,072,107
Total liabilities and shareholders’ equity					$     4,546,320

Computation of Retained earnings:
Accounting Equation
Total assets			$     4,546,320
Less: Liabilities			$     3,474,213
Less: Contributed capital			$        358,340
Retained earnings			$        713,767