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Purpose: (L.O. 3) This exercise will enable you to practice identifying errors and other… 1 answer below » Purpose: (L.O. 3) This exercise will enable you to practice identifying errors and other deficiencies in a balance sheet. Lee Cockerell Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below to submit to the bank in order to obtain additional funds for expansion. Lee Cockerell Company BALANCE SHEET For the Year Ended 2014 Current assets Cash (net of bank overdraft of $15,000) & View complete question » Purpose: (L.O. 3) This exercise will enable you to practice identifying errors and other deficiencies in a balance sheet. Lee Cockerell Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below to submit to the bank in order to obtain additional funds for expansion. Lee Cockerell Company BALANCE SHEET For the Year Ended 2014 Current assets Cash (net of bank overdraft of $15,000) $ 180,000 Accounts receivable (net) 380,000 Inventories, at lower of FIFO cost or market 435,000 Marketable securities—at cost (fair value $110,000) 90,000 Property, plant, and equipment Building (net) 590,000 Office equipment (net) 180,000 Land held for future use 75,000 Intangible assets Franchise 90,000 Cash surrender value of life insurance 80,000 Prepaid insurance 6,000 Current liabilities Salaries payable 18,000 Accounts payable 85,000 Note payable, due June 30, 2016 100,000 Pension obligation 92,000 Taxes payable 40,000 Note payable, due October 1, 2015 25,000 Discount on bonds payable 50,000 Long-term liabilities Bonds payable, 8%, due May 1, 2018 400,000 Stockholders’ equity Common stock, $1 par, authorized 500,000 shares, issued 310,000 shares 310,000 Additional paid-in capital 279,000 Retained earnings ? Instructions Prepare a revised balance sheet in good form. Correct any errors and weaknesses you find in the presentation above. Assume that the accumulated depreciation balance for the building is $150,000 and for the office equipment, $105,000. Marketable securities are classified as trading securities. The allowance for doubtful accounts has a balance of $20,000. The pension obligation is considered to be a long-term liability. You must solve for the balance of Retained Earnings. View less » Nov 16 2015 12:12 PM
