Question

Presented below is the balance sheet for HHD, Inc., at December 31, 2016. Current assets $ 676,000 Current liabilities $ 476,000 Investments 557,000 Long-term liabilities 587,000 Property, plant, and equipment 2,532,000 Shareholders' equity 2,940,000 Intangible assets 238,000 Total assets $ 4,003,000 Total liabilities and shareholders' equity $ 4,003,000 The captions shown in the summarized statement above include the following:a. Current assets: cash, $169,000; accounts receivable, $219,000; inventories, $244,000; and prepaid insurance, $44,000.b. Investments: investments in common stock, short term, $109,000, and long term, $179,000; and restricted cash, long term, $269,000.c. Property, plant, and equipment: buildings, $1,690,000 less accumulated depreciation, $619,000; equipment, $690,000 less accumulated depreciation, $219,000; and land, $990,000.d. Intangible assets: patent, $129,000; and copyright, $109,000.e. Current liabilities: accounts payable, $119,000; notes payable, short term, $169,000, and long term, $109,000; and taxes payable, $79,000.f. Long-term liabilities: bonds payable due 2021.g. Shareholders’ equity: common stock, $1,950,000; retained earnings, $990,000. Five hundred thousand shares of no par common stock are authorized, of which 390,000 shares were issued and are outstanding.Required:Prepare a corrected classified balance sheet for HHD, Inc., at December 31, 2016. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Answer:

2016 Balance Sheet

$169,000 Cash

$109,000 Investment in Common Stock

$219,000 Accounts Receivable

$244,000 Inventory

$44,000  Prepaid Insurances

$785,000  TOTAL CURRENT ASSETS  

$990,000 Land

$690,000 Machinery and Equipment

-$219,000 Accum Depreciation

$1,690,000 Buildings

-$619,000 Accum Depreciation

$129,000 Patents

$269,000 Restricted Cash

$109,000 Copyright

$179,000 Investment in Common Stock

$3,218,000  TOTAL NONCURRENT ASSETS  

$4,003,000  TOTAL ASSETS  

$119,000   Accounts Payable  

$79,000   Taxes Payable  

$169,000  Notes  Payable  

$367,000  TOTAL CURRENT LIABILITIES  

$587,000  Bonds Payable 2021  

$109,000  Notes Payable  

$696,000  TOTAL NONCURRENT LIABILITIES  

$1,063,000  TOTAL LIABILITIES  

$1,950,000  Common Stock  

$990,000  Retained Earnings  

$2,940,000  TOTAL EQUITY  

$4,003,000  TOTAL EQUITY + LIABILITIES  

Explanation:

• Account of Current Assets , the criteria is to have a liquidity speed less than one year

Cash

Investment in Common Stock

Accounts Receivable

Inventory

Prepaid Insurances

• Account of Non Current Assets , the criteria is to have a liquidity speed more than one year and are known as fixed assets

Land

Machinery and Equipment

Accum Depreciation

Buildings

Accum Depreciation

Patents

Restricted Cash

Copyright

Investment in Common Stock

• Account of Current Liabilities , the criteria is to have a liquidity speed less of one year

Accounts Payable  

Taxes Payable  

Notes  Payable  

• Account of Non Current Liabilities, the criteria is to have a liquidity speed more than one year and are known as long term financing

Bonds Payable 2021  

Notes Payable  

• Account of Total Equity

Common Stock  

Retained Earnings  

Liquidity is defined as the speed of the assets that will be converted into cash, Assets that take less days to buy or sell are more liquid than others.

Cash is the most liquid asset, then Accounts Receivable and Inventories for the end, in the middle there are different assets such as capital investments.

Prepaid expenses are not liquid because these accounts do not mean that the company can get cash unless the company has rights to something.