Question & Answer: Problem 5-2 Presented below are a number of balance sheet items for Montoya, Inc., f…..

Problem 5-2 Presented below are a number of balance sheet items for Montoya, 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) $125,000 Accumulated Depreciation-Equipment $ 292,000 239,800 45,000 98,362 480,000 200,000 150,000 87,920 1,470,000 121,000 270,200 1,640,000 177,591 Inventory 300,000 Rent payable (short-term) 15,000 360,000 480,000 445,700 265,000 490,000 Income taxes payable Rent payable (long-term) Common stock, $1 par value Preferred stock, $10 par value Prepaid expenses Equipment ? Equity investments (trading) 97,630 Accumulated Depreciation-Buildings 1,600,000 Buildings

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Problem 5-2 Presented below are a number of balance sheet items for Montoya, 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) $125,000 Accumulated Depreciation-Equipment $ 292,000 239,800 45,000 98,362 480,000 200,000 150,000 87,920 1,470,000 121,000 270,200 1,640,000 177,591 Inventory 300,000 Rent payable (short-term) 15,000 360,000 480,000 445,700 265,000 490,000 Income taxes payable Rent payable (long-term) Common stock, $1 par value Preferred stock, $10 par value Prepaid expenses Equipment ? Equity investments (trading) 97,630 Accumulated Depreciation-Buildings 1,600,000 Buildings

Expert Answer

MONTOYA, INC.
Balance Sheet
December 31, 2017
Assets
Current assets
Cash			$360,000
Equity Investments (Trading)			121,000
Notes Receivable			445,700
Income Taxes Receivable			97,630
Inventory			239,800
Prepaid Expenses			87,920
Total current assets				$1,352,050

Property, plant, and equipment
Land			480,000
Buildings		$1,640,000
Less: Accum Deprec – Buildings		270,200	1,369,800
Equipment		1,470,000
Less: Accum Deprec – Equipment		292,000	1,178,000
				3,027,800
Intangible assets
Goodwill				125,000
Total assets				$4,504,850

Liabilities and Shareholders’ Equity
Current liabilities
Accounts Payable			$490,000
Notes Payable to Banks			265,000
Payroll Taxes Payable			177,591
Income Tax Payable			98,362
Rent Payable – Short-term			45,000
Total current liabilities				$1,075,953

Long-term liabilities
Unsecured Notes Payable (Long-term)			1,600,000
Bonds Payable		$300,000
Less: Discount on Bonds Payable		15,000	285,000
Rental Payable Long-term			480,000	2,365,000
Total liabilities				3,440,953

Shareholders’ equity
Capital Stock
Preferred stock, $10 par; 20,000 shares authorized, 15,000 shares issued
		150,000
Common stock, $1 par; 400,000 shares authorized, 200,000 issued
		200,000	350,000
Retained Earnings ($1,063,897 – $350,000)			713,897
Total shareholders’ equity ($4,504,850 – $3,440,953)				1,063,897
Total liabilities and shareholders’ equity				$4,504,850

	Computation of Retained earnings:
	Accounting Equation
	Total assets		$4,504,850
	Less: Liabilities		3,440,953
	Less: Contributed capital		350,000
	Retained earnings		$713,897

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