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# Nybrostrand Company 2011 Prepare a balance sheet Module 2

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 downpayment 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. Update the balance sheet for the changes to income in module 2 and also consider the effect of paying the dividend. You do not need to include the income statement.

#### Solution Preview

Your tutorial is attached in excel (click in cells to see computations). I have shown ...

#### Solution Summary

Your tutorial is attached in excel (click in cells to see computations). I have shown the original balance sheet and the changes for module 2 and 3. I also included the Income Statement to assist you in learning how this all fits together. Backing out the sale that should not be recorded leaves accounts receivable negative. This is a strange balance.

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