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    Side Kicks Company: Balance Sheet Adjustment and Preparation

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    (Balance Sheet Adjustment and Preparation) The adjusted trial balance of Side Kicks Company and other related information for the year 2004 is presented below.

    Chapter 5
    SIDE KICKS COMPANY
    ADJUSTED TRIAL BALANCE
    DECEMBER 31, 2004

    Debits Credits
    Cash $ 41,000
    Accounts Receivable 163,500
    Allowance for Doubtful Accounts $ 8,700
    Prepaid Insurance 5,900
    Inventory 308,500
    Long-term Investments 339,000
    Land 85,000
    Construction Work in Progress 124,000
    Patents 36,000
    Equipment 400,000
    Accumulated Depreciation of Equipment 140,000
    Unamortized Discount on Bonds Payable 20,000
    Accounts Payable 148,000
    Accrued Expenses 49,200
    Notes Payable 94,000
    Bonds Payable 400,000
    Capital Stock 500,000
    Premium on Capital Stock 45,000
    Retained Earnings 138,000
    $1,522,900 $1,522,900
    Additional information:
    1. The inventory has a replacement market value of $353,000. The LIFO method of
    inventory value is used.
    2. The cost and fair value of the long-term investments that consist of stocks and
    bonds is the same.
    3. The amount of the Construction Work in Progress account represents the costs
    expended to date on a building in the process of construction. (The company rents
    factory space at the present time.) The land on which the building is being
    constructed cost $85,000, as shown in the trial balance.
    4. The patents were purchased by the company at a cost of $40,000 and are being
    amortized on a straight-line basis.
    5. Of the unamortized discount on bonds payable, $2,000 will be amortized in 2005.
    6. The notes payable represent bank loans that are secured by long-term investments
    carried at $120,000. These bank loans are due in 2005.
    7. The bonds payable bear interest at 11% payable every December 31, and are due
    January 1, 2015.
    8. 600,000 shares of common stock of a par value of $1 were authorized, of which
    500,000 shares were issued and outstanding.
    Instructions
    Prepare a balance sheet as of December 31, 2004, so that all important information is
    fully disclosed.

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    Solution Preview

    (Balance Sheet Adjustment and Preparation) The adjusted trial balance of Side Kicks Company and other related information for the year 2004 is presented below.

    Chapter 5
    SIDE KICKS COMPANY
    ADJUSTED TRIAL BALANCE
    DECEMBER 31, 2004

    Debits Credits
    Cash $ 41,000
    Accounts Receivable 163,500
    Allowance for Doubtful Accounts $ 8,700
    Prepaid Insurance 5,900
    Inventory 308,500
    Long-term Investments 339,000
    Land 85,000
    Construction Work in Progress 124,000
    Patents 36,000
    Equipment 400,000
    Accumulated Depreciation of Equipment 140,000
    Unamortized Discount on Bonds Payable 20,000
    Accounts Payable 148,000
    Accrued Expenses 49,200
    Notes Payable 94,000
    Bonds Payable 400,000
    Capital Stock 500,000
    Premium on Capital Stock ...

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