Additional information ($ in 000s):

1. Certain records that included the account balances for the patent and shareholders’ equity items were lost. However, the controller told you that a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.2. That is, total liabilities are 120% of total shareholders’ equity. Retained earnings at the beginning of the year was $4,000. Net income for 2011 was $1,560 and $560 in cash dividends were declared and paid to shareholders.
2. Management intends to sell the investments in the next six months.
3. Interest on both the note and the bonds is payable annually.
4. The note payable is due in annual installments of $1,000 each.
5. Unearned revenue will be earned equally over the next two fiscal years.
6. The common stock represents 400,000 shares of no par stock authorized, 250,000 shares issued and outstanding.


Prepare a complete, corrected, classified balance sheet.

P 3-9 Balance sheet preparation

Presented below is the balance sheet for HHD, Inc., at December 31, 2011.


The captions shown in the summarized statement above include the following:

a. Current assets: cash, $150,000; accounts receivable, $200,000; inventories, $225,000; and prepaid insurance, $25,000.
b. Investments: investments in common stock, short term, $90,000, and long term, $160,000; and bond sinking fund, $250,000.
c. Property, plant, and equipment: buildings, $1,500,000 less accumulated depreciation, $600,000; equipment, $500,000 less accumulated depreciation, $200,000; and land, $800,000.
d. Intangible assets: patent, $110,000; and copyright, $90,000.
e. Current liabilities: accounts payable, $100,000; notes payable, short term, $150,000, and long term, $90,000; and taxes payable, $60,000.
f. Long-term liabilities: bonds payable due 2016.
g. Shareholders’ equity: common stock, $1,000,000; retained earnings, $800,000. Five hundred thousand shares of no par common stock are authorized, of which 200,000 shares were issued and are outstanding.


Prepare a corrected classified balance sheet for HHD, Inc., at December 31, 2011.

P 3-10 Balance sheet preparation  



Melody Lane Music Company was started by John Ross early in 2011. Initial capital was acquired by issuing shares of common stock to various investors and by obtaining a bank loan. The company operates a retail store that sells records, tapes, and compact discs. Business was so good during the first year of operations that John is considering opening a second store on the other side of town. The funds necessary for expansion will come from a new bank loan. In order to approve the loan, the bank requires financial statements.  

John asks for your help in preparing the balance sheet and presents you with the following information for the year ending December 31, 2011:


c. The bank loan was made on March 31, 2011. A note was signed requiring payment of interest and principal on March 31, 2012. The interest rate is 12%.
p. 160


The equipment and furniture were purchased on January 3, 2011, and have an estimated useful life of 10 years with no anticipated salvage value. Depreciation per year is $4,000.
e. Inventories on hand at the end of the year cost $100,000.
f. Amounts owed at December 31, 2011, were as follows:


g. Rent on the store building is $1,000 per month. On December 1, 2011, four months’ rent was paid in advance.
h. Net income for the year was $76,000. Assume that the company is not subject to federal, state, or local income tax.
i. One hundred thousand shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding.


Prepare a balance sheet at December 31, 2011.


Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.