Question

Exquisite Jewelers is developing its annual financial statements for the current year. The following amounts were correct at December 31, current year: cash, $58,000; accounts receivable, $71,000; merchandise inventory, $154,000; prepaid insurance, $1,500; investment in stock of Z Corporation (long-term), $36,000; store equipment, $67,000; used store equipment held for disposal, $9,000; accumulated depreciation, store equipment, $19,000; accounts payable, $52,500; long-term note payable, $42,000; income taxes payable, $9,000; retained earnings, $164,000; and common stock, 100,000 shares outstanding, par value $1.00 per share (originally sold and issued at $1.10 per share).

Answer 1

Answer:

Complete balance sheet is given below. (Req A and B)

Asset                                                 ($)

Non-Current Asset

Investment in stock                      $36,000

Store equipment                           $67,000

Accumulated depreciation           ($19,000)

Current Asset     

Cash                                              $58,000

Accounts Receivable                    $71,000

Merchandise inventory               $154,000

Equipment held for disposal         $9,000

Prepaid insurance                          $1,500

Total Asset                                    $377,500          

Liabilities

Non-Current Liabilities

Long-term note payable                 $42,000

Current Liabilities

Accounts payable                           $52,500

Income taxes payable                       $9,000

Total Liabilities                              $103,500

Equity

Common stock                               $100,000  

Stock premium                                 $10,000

Retained earnings                         $164,000  

Total Equity                                    $274,000  

Grand total                                    $377,500              

Net book value of equipments is given below.

Store equipment                           $67,000

Accumulated depreciation           ($19,000)

Net book Value                             $48,000

Net book value is the amount at which asset subject to depreciation is accounted into balance sheet. It is the value that shows future benifits that is to be derived from the asset.