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# Balancing sheet

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The following information is available for Small Corporation's first year of operations:

Payment for merchandise purchases \$250,000
Ending merchandise inventory 110,000
Accounts payable (balance at end of year) 60,000
Collections from customers 225,000

The balance in accounts payable relates only to merchandise pur-
chases. All merchandise items were marked to sell at 40% above
cost. What should be the ending balance in accounts receivable,
assuming all accounts are deemed collectible?

Solution: (hint)

Purchases - \$250,000
?
less inv -
CGS -
Sales markup -

#### Solution Preview

Please see the attachment for solution.

Since this is the first year of operations and there were \$225,000 of accounts receivable collected, one must compute total sales to determine the ending balance in ...

#### Solution Summary

The solution contains the determination of ending balance in accounts.

\$2.19

## On January 1, DEF Company purchased all outstanding common shares of UVW Corporation at book value.

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The 4 Questions relate to the following information:

On January 1, DEF Company purchased all outstanding common shares of UVW Corporation at book value. DEF used the basic equity method to account for its investment in UVW. The investment account is carried at the book value of UVW's net assets and is adjusted for DEF's share of UVW's earnings and dividends. DEF owed UVW \$2,000 on account at the end of the year. UVW purchased \$8,000 of inventory from DEF during the year. The inventory originally cost DEF \$5,000. UVW still holds 50 percent of the inventory at the end of the year.

* DEF reports net Receivables of \$85,000 on its balance sheet at the end of the year, and UVW reports net Receivables of \$40,000 on its balance sheet at the end of the year. What is the amount of net Receivables to be reported on the consolidated balance sheet for DEF Company and Subsidiary as of the end of the year?
a. \$125,000
b. \$85,000
c. \$40,000
d. \$123,000
e. None of the above

* DEF reports Short-term Payables of \$65,000 and UVW reports Short-term Payables of \$10,000 as of the end of the year. What is the amount of Short-term Payables to be reported on the consolidated balance sheet for DEF Company and Subsidiary as of the end of the year?
a. \$75,000
b. \$65,000
c. \$10,000
d. \$77,000
e. None of the above

* DEF reports Retained Earnings of \$130,000 as of the end of the year, and UVW reports \$90,000. What is the amount of Retained Earnings to be reported on the consolidated balance sheet for DEF Company and Subsidiary as of the end of the year?
a. \$128,500
b. \$130,000
c. \$220,000
d. \$218,500
e. None of the Above

* DEF reports Common Stock of \$700,000 on its balance sheet as of the end of the year, and UVW reports Common Stock of \$300,000. What is the amount of Common Stock to be reported on the consolidated balance sheet for DEF Company and Subsidiary as of the end of the year?
a. \$1,000,000
b. \$300,000
c. \$700,000
d. \$0
e. None of the Above

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