Question

Presented below are a number of balance sheet items for Montoya, Inc., for the current year, 2017:

Goodwill $125,000
Accumulated depreciation-equipment 292,000
Payroll taxes payable 177,591
Inventory 239,800
Bonds payable 300,000
Rent payable (short-term) 45,000
Discount on bonds payable 15,000
Income taxes payable 98,362
Cash 360,000
Rent payable (long-term) 480,000
Land 480,000
Common stock, $1 par value 200,000
Notes receivable 445,700
Preferred stock, $10 par value 150,000
Notes payable (to banks) 265,000
Prepaid expenses 87,920
Accounts payable 490,000
Equipment 1,470,000
Retained earnings ?
Debt investments (trading) 121,000
Income taxes receivable 97,630
Accumulated depreciation-buildings 270,200
Notes payable (long-term) 1,600,000
Buildings 1,640,000

Required:

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 otherwise stated.

Cost and fair market value of equity investments (trading) are the same.

Answer 1

Answer: The answer is provided below

Step-by-step explanation:

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