CHAPTER 5

Statement of Financial Position and Statement of Cash Flows

EXERCISE 5-5 (3035 minutes)
BRUNO COMPANY
Statement of Financial Position
December 31, 2010
Assets
Non-current assets
Long-term investments
Land held for future use.........................
Property, plant, and equipment
Building....................................................
Less: Accum. depr.building.........
Office equipment.....................................
Less: Accum. depr.office
equipment...............................

$ 175,000
$730,000
160,000 $570,000
265,000
105,000

Intangible assets
Goodwill...................................................
Other identifiable assets.........................
Total non-current assets.........................
Current assets
Inventories, at lower of average
cost or net realizable value.................
Accounts receivable............................... 357,000
Less: Allowance for doubtful
accounts...................................... 17,000
Prepaid expenses....................................
Trading securitiesat fair value............
Cash.........................................................
Total current assets..........................

160,000
80,000
90,000

730,000

170,000
1,075,000

401,000
340,000
12,000
120,000
260,000

1,133,000

Total assets........................................

$2,208,000

EXERCISE 5-5 (Continued)

Equity and Liabilities
Equity
Share capitalordinary, $1 par,
authorized 400,000 shares, issued
290,000 shares.........................................$290,000
Share premiumordinary...................... 180,000
Retained earnings...................................
Total equity........................................
Non-current liabilities
Bonds payable......................................... 500,000
Add: Premium on bonds payable.......... 53,000
Pension obligation..................................
Total non-current liabilities................
Current liabilities
Notes payable (due next year)................
Accounts payable....................................
Rent payable............................................
Total current liabilities......................
Total liabilities....................................
Total equity and liabilities.............................
*$2,208,000 $944,000 $470,000

$470,000
794,000*
$1,264,000

553,000
82,000
$635,000
125,000
135,000
49,000
309,000
944,000
$2,208,000

EXERCISE 5-11 (2530 minutes)

ABBEY CORPORATION
Statement of Financial Position
December 31, 2010
Assets
Property, plant, and equipment
Equipment...............................................................
Less: Accumulated depreciation.........................
Total property, plant, and equipment.............

48,000
9,000

Intangible assets
Trademark...............................................................
Current assets
Office supplies........................................................
Prepaid insurance..................................................
Cash........................................................................
Total current assets........................................
Total assets......................................................

39,000
950

1,200
1,000
6,850*

9,050
49,000

Equity and Liabilities

Equity
Share capitalordinary
Retained earnings (20,000 2,500)
Total shareholders equity

10,000
17,500

Non-current liabilities
Bonds payable
Current liabilities
Accounts payable
Wages payable
Unearned service revenue
Total current liabilities
Total liabilities
Total equity and liabilities
*[49,000 39,000 950 1,200 1,000]

27,500

9,000
10,000
500
2,000

12,500
21,500

49,000

**[10,000 (9,000 + 1,400 + 1,200 + 900)]

EXERCISE 5-12 (3035 minutes)

VIVALDI CORPORATION
Statement of Financial Position
December 31, 2010
Assets
Non-current assets
Long-term investments
Investments in bonds............................
Investments in capital shares...............
Total long-term investments.........

$299,000
277,000

Property, plant, and equipment

Land........................................................
Buildings................................................. $1,040,000
Less: Accum. depreciation..................
352,000
Equipment.............................................
600,000
Less: Accum. depreciation.................
60,000
Total property, plant, and
equipment.....................................
Intangible assets
Franchise................................................
Patent......................................................
Total intangible assets.....................
Total non-current assets.................
Current assets
Inventories..............................................
Accounts receivable..............................
Less: Allowance for doubtful
accounts............................................
Trading securities..................................
Cash........................................................
Total current assets........................
Total assets......................................

260,000
688,000
540,000
1,488,000
160,000
195,000

435,000
25,000

$ 576,000

355,000
2,419,000

597,000
410,000
153,000
197,000

1,357,000
$3,776,000

EXERCISE 5-12 (Continued)

Equity and Liabilities

Equity
Share capitalordinary ($5 par).......................
Retained earnings*.............................................
Accumulated other comprehensive
income............................................................
Less: Treasury shares......................................
Total equity.................................................
Non-current liabilities
Bonds payable....................................................
$1,000,000
Long-term notes payable...................................
900,000
Provision for pensions......................................
80,000
Total non-current liabilities.......................
Current liabilities
Short-term notes payable..................................
$ 90,000
Accounts payable...............................................
455,000
Dividends payable..............................................
136,000
Accrued liabilities..............................................
96,000
Total current liabilities...............................
Total liabilities............................................
Total equity and liabilities.......................................

$1,000,000
130,000
80,000
191,000

$1,019,000

1,980,000

777,000

2,757,000
$3,776,000

EXERCISE 5-12 (Continued)

*Computation of Retained Earnings:
Sales.........................................................................
Investment revenue.................................................
Cost of goods sold..................................................
Selling expenses......................................................
Administrative expenses........................................
Interest expense......................................................
Net income...............................................................
Beginning retained earnings..................................
Net income...............................................................
Ending retained earnings.......................................

$7,900,000
63,000
(4,800,000)
(2,000,000)
(900,000)
(211,000)
$ 52,000
$

78,000
52,000
$ 130,000

Or ending retained earnings can be computed as follows:

Total equity ($3,776,000 $2,757,000).....................
Add: Treasury shares.............................................
Less: Share capital and Accum. other
comprehensive income.................................
Ending retained earnings.........................................

$1,019,000
191,000
1,080,000
$ 130,000

Note to instructor: There is no dividends account. Thus, the 12/31/10 retained

earnings balance already reflects any dividends declared.

PROBLEM 5-2

MONTOYA, INC.
Statement of Financial Position
December 31, 2010
Assets
Non-current assets
Property, plant, and equipment
Land......................................................
480,000
Building................................................ 1,640,000
Less: Accum. depreciation
building............................... 270,200 1,369,800
Equipment............................................ 1,470,000
Less: Accum. depreciation
equipment........................... 292,000 1,178,000
Intangible assets
Goodwill................................................
Current assets
Inventories............................................
Notes receivable..................................
Income taxes receivable......................
Prepaid expenses................................
Trading securities................................
Cash......................................................
Total current assets.......................
Total assets....................................

3,027,800

125,000
239,800
445,700
97,630
87,920
121,000
360,000
1,352,050
4,504,850

PROBLEM 5-2 (Continued)

Equity and Liabilities

Equity
Share capital
Share capitalPreference
10 par; 20,000 shares
authorized, 15,000
shares issued.................................. 150,000
Share capitalordinary, 1 par;
400,000 shares authorized,
200,000 issued................................. 200,000
Retained earnings
(1,063,897 350,000)......................
Total shareholders equity
(4,504,850 3,440,953).............
Non-current liabilities
Unsecured notes payable
(long-term).........................................1,600,000
Bonds payable...................................... 285,000
Long-term rental obligations............... 480,000
Total non-current liabilities...........
Current liabilities
Notes payable to banks........................ 265,000
Accounts payable................................. 490,000
Payroll taxes payable............................ 177,591
Taxes payable........................................ 98,362
Rent payable.......................................... 45,000
Total current liabilities....................
Total liabilities.................................
Total equity and liabilities..............
Au: Is it correct. Pls confirm

350,000
713,897
1,063,897

2,365,000

1,075,953

3,440,953
4,504,850

PROBLEM 5-3

EASTWOOD COMPANY
Statement of Financial Position
December 31, 2010
Assets

Non-current assets
Long-term investments
Investments in capital shares and,
bonds ($120,000 have been pledged
as security for notes payable)
at fair value..............................................
Property, plant, and equipment
Cost of uncompleted plant facilities
Land....................................................
Building in process of
construction...................................
Equipment................................................
Less: Accum. depreciation....................

$339,000

$85,000
124,000
400,000
240,000

$209,000
160,000

Intangible assets
Patents (at cost less amortization)........
Current assets
Inventory (Average cost)........................
Accounts receivable............................... 163,500
Less: Allowance for doubtful
accounts.......................................
8,700
Prepaid insurance...................................
Cash.........................................................
Total current assets..........................
Total assets........................................

369,000
36,000

208,500
154,800
5,900
41,000

410,200
$1,154,200

PROBLEM 5-3 (Continued)

Equity and Liabilities

Equity
Share capitalordinary
Authorized 600,000 shares of $1
par value; issued and
outstanding, 500,000 shares.........
Share premiumordinary....................
Retained earnings.................................
Total shareholders equity..............
Non-current liabilities
8% bonds payable, due
January 1, 2021..................................

Current liabilities
Notes payable, secured by
investments of $120,000..................... $ 94,000
Accounts payable................................. 148,000
Accrued expenses................................
49,200
Total current liabilities....................
Total liabilities.................................
Total equity and liabilities..........................
Au: Is it correct. Pls confirm

$500,000
45,000
138,000

683,000

180,000

291,200

471,200
$1,154,200