List the corrections needed to present in good form the balance sheet below. Errors include misclassifications, lack of adequate disclosure, and poor terminology. Do not concern yourself with the arithmetic. If an item can be classified in more than one category, select the category most favored by the authors of your textbook.
For the year ended December 31, 2007
Treasury stock 78,000
Tangible Fixed Assets:
Buildings and land 213,000
Less: Reserve for depreciation 60,000 153,000
Unamortized discount on bonds payable 3,000
Cash surrender value of life insurance 54,000
Liabilities and Capital
Accounts payable $45,000
Reserve for income taxes 42,000
Customer's accounts with credit balances 3 $87,003
Bonds payable 120,000
Total Liabilities 207,003
Capital stock 225,000
Earned surplus 74,997
Cash dividends declared 24,000 323,997
1. "For the year ended" in the title should be deleted.
2. Trading securities should be reported at their fair value.
3. The amount of Allowance for Doubtful Accounts should be disclosed and deducted from Accounts Receivable.
4. The inventory costing method (cost, lower of cost or market) and the basis for pricing the inventory (LIFO, FIFO, etc.) should be disclosed.
5. Stock Investment in Subsidiary should be ...
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