E5-12 (Preparation of a Balance Sheet) Presented below is the trial balance of John Nalezny Corporation at December 31, 2007. Debits Credits Cash $ 197,000 Sales $ 8,100,000 Trading Securities (at cost, $145,000) 153,000 Cost of Goods Sold 4,800,000 Long-term Investments in Bonds 299,000 Long-term Investments in Stocks 277,000 Short-term Notes Payable 90,000 Accounts Payable 455,000 Selling Expenses 2,000,000 Investment Revenue 63,000 Land 260,000 Buildings 1,040,000 Dividends Payable 136,000 Accrued Liabilities 96,000 Accounts Receivable 435,000 Accumulated Depreciation—Buildings 152,000 Allowance for Doubtful Accounts 25,000 Administrative Expenses 900,000 Interest Expense 211,000 Inventories 597,000 Extraordinary Gain 80,000 Long-term Notes Payable 900,000 Equipment 600,000 Bonds Payable 1,000,000 Accumulated Depreciation—Equipment 60,000 Franchise 160,000 Common Stock ($5 par) 1,000,000 Treasury Stock 191,000 Patent 195,000 Retained Earnings 78,000 Additional Paid-in Capital 80,000 Totals $12,315,000 $12,315,000 Instructions Prepare a balance sheet at December 31, 2007, for John Nalezny Corporation. Ignore income taxes. E5-5 (Preparation of a Corrected Balance Sheet) Uhura Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below in order to obtain additional funds for expansion. UHURA COMPANY BALANCE SHEET FOR THE YEAR ENDED 2007 Current assets Cash $230,000 Accounts receivable (net) 340,000 Inventories at lower of average cost or market 401,000 Trading securities—at cost (fair value $120,000) 140,000 Property, plant, and equipment Building (net) 5 70,000 Office equipment (net) 160,000 Land held for future use 175,000 Intangible assets Goodwill 80,000 Cash surrender value of life insurance 90,000 Prepaid expenses 12,000 Current liabilities Accounts payable 135,000 Notes payable (due next year) 125,000 Pension obligation 82,000 Rent payable 49,000 Premium on bonds payable 53,000 Long-term liabilities Bonds payable 500,000 Stockholders’ equity Common stock, $1.00 par, authorized 400,000 shares, issued 290,000 290,000 Additional paid-in capital 160,000 Retained earnings ? Instructions Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $160,000 and for the office equipment, $105,000. The allowance for doubtful accounts has a balance of $17,000. The pension obligation is considered a long-term liability. P5–3 (Balance Sheet Adjustment and Preparation) The adjusted trial balance of Side Kicks Company and other related information for the year 2007 are presented on the next page SIDE KICKS COMPANY ADJUSTED TRIAL BALANCE DECEMBER 31, 2007 Debits Credits Cash $ 41,000 Accounts Receivable 1 63,500 Allowance for Doubtful Accounts $ 8,700 Prepaid Insurance 5,900 Inventory 308,500 Long-term Investments 339,000 Land 85,000 Construction Work in Progress 124,000 Patents 36,000 Equipment 400,000 Accumulated Depreciation of Equipment 140,000 Unamortized Discount on Bonds Payable 20,000 Accounts Payable 148,000 Accrued Expenses 49,200 Notes Payable 94,000 Bonds Payable 400,000 Common Stock 500,000 Premium on Common Stock 45,000 Retained Earnings 138,000 $1,522,900 $1,522,900 Additional 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 $85,000, 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 2008. 6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2008. 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. Instructions Prepare a balance sheet as of December 31, 2007, so that all important information is fully disclosed.