Solution To P4-6
Solution To P4-6
Solution To P4-6
1.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Patents should be classified under Intangibles rather than Property, Plant, and
Equipment.
(8)
(9)
(10)
(11)
Accumulated depreciation: buildings is not a current liability. It is a contraasset account and should be placed immediately after the Buildings account
in Property, Plant, and Equipment.
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
P4-6
2.
(continued)
(20)
(21)
(22)
(23)
Assets
Current Assets:
Cash....................................................................
Marketable securities, short-term.......................
Accounts receivable............................................
Less: Allowance for doubtful accounts................
Inventory, at cost (market value, $28,000).........
Total current assets.......................................
Long-Term Investments:
Investment in D Company bonds (at book value)
Cash surrender value of life insurance................
Sinking fund to retire bonds................................
Total long-term investments..........................
Property, Plant, and Equipment:
Land....................................................................
Buildings.............................................................
Less: Accumulated depreciation..........................
Equipment..........................................................
Less: Accumulated depreciation..........................
Total property, plant, and equipment............
Intangibles:
Patents (net).......................................................
Trademarks.........................................................
Total intangibles............................................
Total Assets...............................................................
(continued on next page)
$6,300
10,000
$15,900
(700)
15,200
27,200
$
5,000
6,000
$58,700
7,300
18,300
$40,800
(17,100)
$19,000
(7,000)
$11,300
23,700
12,000
$5,200
5,700
47,000
10,900
$134,900
P4-6
(concluded)
Liabilities
Current Liabilities:
Accounts payable.................................................................
Wages payable.....................................................................
Current taxes payable..........................................................
Total current liabilities...................................................
Long-Term Liabilities:
Bonds payable.....................................................................
Less: Discount on bonds payable.........................................
Total Liabilities.........................................................................
$13,000
3,000
9,600
$46,000
(3,900)
Shareholders Equity
Contributed Capital:
Preferred stock, $50 par.....................................................
$15,000
Common stock, $2 par.......................................................
8,000
Additional paid-in capital on preferred stock......................
5,100
Additional paid-in capital on common stock.........................
23,200
Total contributed capital...............................................
Retained earnings....................................................................
Accumulated Other Comprehensive Income:
Unrealized increase in value of available-for-sale securities
1,300
Total contributed capital, retained earnings, and accumulated
other comprehensive income........................................
Less: Treasury stock (at cost).............................................
Total Shareholders Equity........................................................
Total Liabilities and Shareholders Equity.................................
$25,600
42,100
$ 67,700
$51,300
16,000
$68,600
(1,400)
$ 67,200
$134,900