Bruno Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below in order to obtain additional funds for expansion.

BRUNO COMPANY

BALANCE SHEET

DECEMBER 31, 2012

Current assets

Cash $262,650

Accounts receivable (net) 342,650

Inventories (lower-of-average-cost-or-market) 403,650

Equity investments (trading)—at cost (fair value $123,330) 143,330

Property, plant, and equipment

Buildings (net) 573,330

Equipment (net) 163,330

Land held for future use 178,330

Intangible assets

Goodwill 82,650

Cash surrender value of life insurance 92,650

Prepaid expenses 14,650

Current liabilities

Accounts payable 138,330

Notes payable (due next year) 127,650

Pension obligation 85,330

Rent payable 51,650

Premium on bonds payable 55,650

Long-term liabilities

Bonds payable 503,330

Stockholders’ equity

Common stock, $1.00 par, authorized 400,000 shares, issued 292,650 292,650

Additional paid-in capital 182,650

Retained earnings ?





Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $162,650 and for the office equipment, $107,650. The allowance for doubtful accounts has a balance of $19,650. The pension obligation is considered a long-term liability. (List current assets in order of liquidity. List property plant and equipment in order of buildings and equipment.)

 

2.       Presented below is the trial balance of Vivaldi Corporation at December 31, 2012.

Debit Credit

Cash $200,110

Sales $7,902,670

Debt Investments (trading) (cost, $145,000) 155,670

Cost of Goods Sold 4,802,670

Debt Investments (long-term) 302,110

Equity Investments (long-term) 280,110

Notes Payable (short-term) 92,670

Accounts Payable 457,670

Selling Expenses 2,002,670

Investment Revenue 64,260

Land 260,000

Buildings 1,043,110

Dividends Payable 139,110

Accrued Liabilities 98,670

Accounts Receivable 437,670

Accumulated Depreciation—Buildings 352,000

Allowance for Doubtful Accounts 27,670

Administrative Expenses 901,260

Interest Expense 212,260

Inventory 600,110

Extraordinary Gain 81,260

Notes Payable (long-term) 903,110

Equipment 602,670

Bonds Payable 1,003,110

Accumulated Depreciation—Equipment 60,000

Franchises 160,000

Common Stock ($5 par) 1,002,670

Treasury Stock 193,670

Patents 195,000

Retained Earnings 81,110

Paid-in Capital in Excess of Par 83,110

$12,349,090 $12,349,090



Calculate ending retained earnings and prepare a balance sheet at December 31, 2012, for Vivaldi Corporation. Ignore income taxes. (List current assets in order of liquidity. List property plant and equipment in order of land, building and equipment.)

 

3.       Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31.

2012 2011

Cash $205,670 $102,180

Accounts receivable 235,800 242,350

Investments 68,120 96,940

Equipment 390,380 314,400

Less: Accumulated depreciation—equipment (138,860 ) (116,590 )

Current liabilities 175,540 197,810

Capital stock 209,600 209,600

Retained earnings 375,970 231,870



Additional information:



Investments were sold at a loss (not extraordinary) of $9,170; no equipment was sold; cash dividends paid were $65,500; and net income was $209,600.



(a) Prepare a statement of cash flows for 2012 for Sondergaard Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

 

 

4.       As loan analyst for Madison Bank, you have been presented the following information.

Plunkett Co. Herring Co.

Assets

Cash $117,200 $319,000

Receivables 210,300 306,200

Inventories 579,400 510,100

Total current assets 906,900 1,135,300

Other assets 505,200 614,100

Total assets $1,412,100 $1,749,400



Liabilities and Stockholders’ Equity

Current liabilities $308,100 $349,600

Long-term liabilities 390,400 505,200

Capital stock and retained earnings 713,600 894,600

Total liabilities and stockholders’ equity $1,412,100 $1,749,400

Annual sales $935,700 $1,517,200

Rate of gross profit on sales 30 % 40 %



Each of these companies has requested a loan of $50,010 for 6 months with no collateral offered. In as much as your bank has reached its quota for loans of this type, only one of these requests is to be granted.



Compute the various ratios for each company. (Round answer to 2 decimal places, e.g. 2.25.)

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