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 $60,000 but, due to a significant increase in market value, is listed at $140,000. The increase in the land account was credited to retained earnings.
2. Marketable equity securities consist of stocks of other corporations and are recorded at cost, $30,000 of which will be sold in the coming year. The remainder will be held indefinitely.
3. Notes payable are all long-term. However, a $200,000 note requires an installment payment of $50,000 due in the coming year.
4. Inventories are recorded at current resale value. The original cost of the inventories is $170,000.
Required:
Prepare a corrected classified balance sheet for the Hubbard Corporation at December 31, 2016.

Answer 1

HUBBARD CORPORATION

Balance Sheet as at December 31, 2016

Assets Amount$

Current assets

Cash 70000

Marketable securities 30000

Accounts receivable (net) 140000

Inventories 170000

Total current assets 410000

Investments:

Marketable securities 50000

Land held for sale 60000

Total investments 110000

Property, plant, and equipment:

Land 140000

Buildings 760000

Machinery 290000

1190000

Less: Accumulated -265000

depreciation

Net property, plant, and equipment 925000

Intangible assets:

Patent 110000

Total assets 1555000

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable 225000

Current maturities of long-term debt 50000

Total current liabilities 275000

Long-term liabilities

Notes payable 470000

Shareholders’ equity:

Common stock, no par value 440000

110,000 shares authorized; 110,000

shares issued and outstanding

Retained earnings 370000

Total shareholders’ equity 810000

Total liabilities and shareholders’ equity 1555000