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Exercise 3-5 Balance sheet preparation [LO3-2, 3-3]
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation.
| Account Title | Debits | Credits | ||
| Cash | 45,000 | |||
| Accounts receivable | 96,000 | |||
| Inventories | 121,000 | |||
| Interest payable | 30,000 | |||
| Marketable securities | 84,000 | |||
| Land | 160,000 | |||
| Buildings | 400,000 | |||
| Accumulated depreciation—buildings | 120,000 | |||
| Equipment | 115,000 | |||
| Accumulated depreciation—equipment | 45,000 | |||
| Copyright (net of amortization) | 32,000 | |||
| Prepaid expenses (next 12 months) | 52,000 | |||
| Accounts payable | 85,000 | |||
| Deferred revenues (next 12 months) | 40,000 | |||
| Notes payable | 350,000 | |||
| Allowance for uncollectible accounts | 7,000 | |||
| Common stock | 400,000 | |||
| Retained earnings | 28,000 | |||
| Totals | 1,105,000 | 1,105,000 | ||
Additional information:
The $160,000 balance in the land account consists of $120,000 for the cost of land where the plant and office buildings are located. The remaining $40,000 represents the cost of land being held for speculation.
The $84,000 in the marketable securities account represents an investment in the common stock of another corporation. Valley intends to sell one-half of the stock within the next year.
The notes payable account consists of a $140,000 note due in six months and a $210,000 note due in three annual installments of $70,000 each, with the first payment due in August of 2019.
Required:
Prepare a classified balance sheet for the Valley Pump Corporation at December 31, 2018
Expert Answer
