Question

The following balance sheet for the Hubbard Corporation was prepared by the company:

HUBBARD CORPORATION
Balance Sheet
At December 31, 2016
Assets
Buildings $ 760,000
Land 280,000
Cash 70,000
Accounts receivable (net) 140,000
Inventories 260,000
Machinery 290,000
Patent (net) 110,000
Investment in marketable equity securities 80,000
Total assets $ 1,990,000
Liabilities and Shareholders' Equity
Accounts payable $ 225,000
Accumulated depreciation 265,000
Notes payable 520,000
Appreciation of inventories 90,000
Common stock, authorized and issued
110,000 shares of no par stock 440,000
Retained earnings 450,000
Total liabilities and shareholders' equity $ 1,990,000
Additional information:
1. The buildings, land, and machinery are all stated at cost except for a parcel of land that the company is holding for future sale. The land originally cost $51,000 but, due to a significant increase in market value, is listed at $122,000. The increase in the land account was credited to retained earnings.
2. The investment in equity securities account consists of stocks of other corporations and are recorded at cost, $21,000 of which will be sold in the coming year.
3. The remainder will be held indefinitely.Notes payable are all long term. However, a $110,000 note requires an installment payment of $27,500 due in the coming year.
4. Inventory is recorded at current resale value. The original cost of the inventory is $161,000.
Required:
Prepare a corrected classified balance sheet for the Hubbard Corporation at December 31, 2016. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Corrected Classified:

HUBBARD CORPORATION

Balance Sheet

At December 31, 2016

Assets

Current Assets:

Cash 70,000

Accounts receivable (net) 140,000

Inventories 170,000

Investment in marketable

equity securities 21,000

Total current assets $401,000

Land 280,000

Buildings 760,000

Accumulated depreciation -265,000 495,000

Machinery 290,000

Patent (net) 110,000

Investment in marketable

equity securities 59,000

Total long-term assets $1,234,000

Total assets $ 1,635,000

Liabilities and Shareholders' Equity :

Current liabilities:

Accounts payable $ 225,000

Short-term Notes payable 27,500

Total current liabilities $252,500

Long-term liabilities:

Notes payable $492,500

Total liabilities $745,000

Equity:

Common stock, authorized and issued

110,000 shares of no par stock 440,000

Retained earnings 379,000

Other comprehensive income 71,000 $890,000

Total liabilities and shareholders' equity $ 1,635,000

Step-by-step explanation:

HUBBARD CORPORATION

Balance Sheet

At December 31, 2016

Assets

Buildings $ 760,000

Land 280,000

Cash 70,000

Accounts receivable (net) 140,000

Inventories 260,000

Machinery 290,000

Patent (net) 110,000

Investment in marketable

equity securities 80,000

Total assets $ 1,990,000

Liabilities and Shareholders' Equity

Accounts payable $ 225,000

Accumulated depreciation 265,000

Notes payable 520,000

Appreciation of inventories 90,000

Common stock, authorized and issued

110,000 shares of no par stock 440,000

Retained earnings 450,000

Total liabilities and shareholders' equity $ 1,990,000

1. Retained Earnings 450,000

Fair Value Gain: Land (71,000)

Balance 379,000

Other comprehensive income:

Fair Value Gain of Land 71,000

3. Short-term Investment 21,000

Long-term Investment 59,000

4. Notes payable 520,000

Short-term Notes payable (27,500)

Long-term Notes payable 492,500

5. Inventory 260,000

Appreciation of inventories (90,000 )

Inventory value 170,000