balance sheet

dvxg · #1 Dec 6, 2006, 02:09 PM

Can anybody help me solve this problem? I have difficulties with it. Thanks
Balance sheet presentation

The following balance sheet was prepared by the bookkeeper for Perry Company as of December 31, 2007.

Perry Company
Balance Sheet
As of December 31, 2007
Cash $80,000 Accounts payable $75,000
Accounts receivable (net) 52,200 Long-term liabilities 100,000
Inventories 57,000 Stockholders’ equity 218,500
Investments 76,300
Equipment (net) 96,000
Patents 32,000
$393,500 $393.500

The following additional information is provided:

1. Cash includes the cash surrender value of a life insurance policy $9,400, and a bank overdraft of $2,500 has been deducted.
2. The net accounts receivable balance includes:
(a) accounts receivable –debit balances $60,000
(b) accounts receivable –credit balances $4,000
(c) allowance for doubtful accounts $3,800
3. Inventories do not include goods costing $3,000 shipped out on consignment.
Receivables of $3,000 were recorded on these goods.
4. Investments include investments in common stock, trading $19,000 and available-for-sale $48,300, and franchises $9,000.
5. Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
Instructions:
Prepare a balance sheet in good form (stockholders’ equity details can be omitted.)

coolwave · Jul 8, 2008, 01:41 PM

Sure I can help you with this. Is this just a general question or it looks like for a class. I had to take accounting and I did not like it but did well. Where would you like me to start? Cool Wave

morgaine300 · Jul 9, 2008, 02:00 AM

It's most definitely homework. Not only are "general" questions usually not numbered so neatly, but this is also the Homework Help section. Everything here is homework unless someone has lost their way. And we aren't here to answer homework for anyone.

dvxg:
You need to look at each thing one at a time and look at whether it was done correctly, and if not, what needed to be done with it. i.e. the first one lists two things that happened with cash. Does the cash surrender value belong in cash? If not, where does it belong? Should the bank overdraft have been deducted? If not, what should have happened to it? And if something is wrong, then correct it.

(Just as an example, let's say someone included a 3-month CD under Held-to-Maturity securities when it's supposed to be under Cash Equivalents. You would want to reduce the investment account by that amount and add it to the Cash & Cash Eq section by that same amount, to correct it.)

Go through each one in this manner. Not a bad idea to write the original balances with plenty of space in between to change balances as needed.

You need to make an attempt to do your own work first. Try to go through them and see what you can come up with. If you have specific questions about any of them, then ask the specific question.