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Correct an accounting error and create a Balance Sheet

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One client had indicated that they were interested in purchasing $42,500 worth of products. However, the client has not actually committed to the purchase.
The bookkeeper may have made a mistake when computing cost of good sold. She included total production costs for 2011 and did not adjust ending inventory for the $42,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.
The company made a secondary offering of stock and raised an additional $150,000.
The company had already paid $15,000 in dividends before deciding on the offering.
The company now has cash to invest in a piece of raw land on which to build in the future. The investment takes place before year end. The cost of the land is $400,000, the down payment is $50,000 and a note to the bank covers the rest.

Nybrostrand Company
31-Dec-11
Trial Balance (accounts in alphabetical order)
Debit Credit
Accounts payable 78,000
Accounts receivable 36,500
Cash 16,700
Common stock 10,000
Depreciation expense 24,350
Cost of goods sold 317,000
Equipment (net of depreciation) 395,000
Insurance 1,400
Inventory 34,000
Long-term debt 127,000
Marketing 4,500
Paid-in capital 50,000
Property taxes 16,900
Rent 28,000
Retained earnings ?
Revenues 586,000
Salaries 78,500
Utilities 6,700

Total 959,550 851,000

Prepare a balance sheet for the company in good format. You do not need to include the income statement.

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Solution Summary

One client had indicated that they were interested in purchasing $42,500 worth of products. However, the client has not actually committed to the purchase.
The bookkeeper may have made a mistake when computing cost of good sold. She included total production costs for 2011 and did not adjust ending inventory for the $42,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.
The company made a secondary offering of stock and raised an additional $150,000.
The company had already paid $15,000 in dividends before deciding on the offering.
The company now has cash to invest in a piece of raw land on which to build in the future. The investment takes place before year end. The cost of the land is $400,000, the down payment is $50,000 and a note to the bank covers the rest.

Nybrostrand Company
31-Dec-11
Trial Balance (accounts in alphabetical order)
Debit Credit
Accounts payable 78,000
Accounts receivable 36,500
Cash 16,700
Common stock 10,000
Depreciation expense 24,350
Cost of goods sold 317,000
Equipment (net of depreciation) 395,000
Insurance 1,400
Inventory 34,000
Long-term debt 127,000
Marketing 4,500
Paid-in capital 50,000
Property taxes 16,900
Rent 28,000
Retained earnings ?
Revenues 586,000
Salaries 78,500
Utilities 6,700

Total 959,550 851,000

Prepare a balance sheet for the company in good format. You do not need to include the income statement.

Purchase this Solution


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