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    Preparation of balance sheet

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    28. The following balance sheet was prepared by the bookkeeper for

    Jim Starr Company as of December 31, 1998.

    Jim Starr Company

    Balance Sheet

    as of December 31, 1998

    Cash $ 80,000 Accounts Payable $ 75,000

    Accounts receivable (net) 52,200 Long-term liabilities 100,000

    Inventories 57,000 Stockholders' equity 218,500

    Investments 76,300

    Equipment (net) 96,000

    Patents 32,000

    -------- --------

    $393,500 $393,500

    The following additional information is provided:

    1. Cash includes the cash surrender value of a life insurance policy

    $9,400, and a bank overdraft of $2,500 has been deducted.

    2. The net accounts receivable balance includes:

    (a) accounts receivable--debit balances $60,000;

    (b) accounts receivable--credit balances $4,000;

    (c) allowance for doubtful accounts $3,800.

    3. Inventories do not include goods costing $3,000 shipped out on

    consignment. Receivables of $3,000 were recorded on these goods.

    4. Investments include investments in common stock, trading $19,000

    and available-for-sale $48,300, and organization costs $9,000.

    5. Equipment costing $5,000 with accumulated depreciation $4,000 is

    no longer used and is held for sale. Accumulated depreciation on

    the other equipment is $40,000.


    Prepare a balance sheet in good form (stockholders' equity details

    can be omitted.)

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    Solution Preview

    Dear student,

    Answer attached.
    Balance sheet
    Liabilities Assets
    Accounts payable 75000 cash 73100
    Bank overdraft 2500 Life Insurance Policy 9400
    Long term liabilities 100000 Acounts ...

    Solution Summary

    The solution contains preparation of Balance sheet in good form when incorrect balance sheet was given.