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Prepare a Balance Sheet

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The following balance sheet was prepared by the bookkeeper for Brown Company as of December

Brown Company
Balance Sheet
as of December 31, 2007

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 $12,000, 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 $13,000 and available-for-sale $48,300, and franchises $15,000.

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 Summary

The solution explains how to prepare a corrected balance sheet from the details provided.

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