Erroneous Balance Sheet The Cutler Corporation prepared the following balance sheet:
CUTLER CORPORATION
Balance Report For Year Ended December 31, 2007
|
Current Assets Cash $ 6,300 |
Current Liabilities Accounts payable |
$13,000 |
|
Accounts receivable 15,900 |
Accumulated depreciation: buildings |
17,100 |
|
Inventory, at higher of cost or market (cost $27,200) 28,000 Long-Term Investments |
Wages payable Additional paid-in capital on common stock |
3,000 23,200 |
|
Treasury stock (at cost) 1,400 Investment in D Company bonds (at book value) 7,300 Marketable securities, |
Long-Term Liabilities Bonds payable $46,000 Less: Sinking fund to retire bonds (6,000) |
40,000 |
|
short-term at market value 10,000 |
Preferred stock, $50 par |
15,000 |
|
Property, Plant, and Equipment |
Premium on preferred stock |
5,100 |
|
Land 11,300 |
Accumulated depreciation: equipment |
7,000 |
|
Patents $8,000 Less: Accumulated amortization (2,800) 5,200 |
Current taxes payable Owners’ Equity: |
9,600 |
|
Buildings 40,800 Equipment 19,000 Intangibles Trademarks 5,700 |
Common stock, $2 par Unrealized gain on write-up of marketable securities to market value |
8,000 1,300 |
|
Other Assets Cash surrender value of life insurance 5,000 |
Unrealized gain on write-up of inventory to market value |
800 |
|
Discount on bonds payable 3,900 |
Retained earnings |
16,000 |
|
Total Assets $159,800 |
Allowance for doubtful accounts |
700 |
|
Total Equities |
$159,800 |
Required
1. Identify the errors made in the Cutler balance sheet.
2. Prepare a corrected, properly classified balance sheet.
