Question;Team #:Exercise: W4-T1 Balance Sheet Adjustment and Preparation (Chapter 5)Presented below is the adjusted trial balance of Bailey Corporation at December 31, 2008.Debits CreditsCash $52,000Accounts Receivable 173,000Allowance for Doubtful Accounts 10,400Prepaid Insurance 6,300Inventory 319,300Long-term Investments 345,000Land 105,000Construction Work in Progress 136,000Patents 36,000Equipment 380,000Accumulated Depreciation - Equipment 165,000Unamortized Discount on Bonds Payable 20,000Accounts Payable 152,200Accrued Expenses 52,000Notes Payable 100,000Bonds Payable 400,000Common Stock 500,000Premium on Common Stock 50,000Retained Earnings 143,000Total $1,572,600 $1,572,600Additional Information:1. The LIFO method of inventory value is used.2. The cost and fair value of the long-term investments that consist of stocks and bonds is the same.3. The amount of the Construction Work in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $105,000, as shown in the trial balance.4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis.5. Of the unamortized discount on bonds payable, $2,000 will be amortized in 2009.6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2009.7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2018.8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding.
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