Question: The following incomplete balance sheet for the
The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the company’s controller. As accounting manager for Sanderson, you are attempting to reconstruct and revise the balance sheet.
Additional Information ($ in thousands):
1. Certain records that included the account balances for the patent and shareholders’ equity items were lost. However, the controller told you that a complete, preliminary balance sheet prepared before the records were lost showed a debt-to-equity ratio of 1.2. That is, total liabilities are 120% of total shareholders’ equity.
Retained earnings at the beginning of the year was $4,000. Net income for 2021 was $1,560 and $560 in cash dividends were declared and paid to shareholders.
2. Management intends to sell the investments in the next six months.
3. Interest on both the notes and the bonds is payable annually.
4. The notes payable are due in annual installments of $1,000 each.
5. Deferred revenue will be recognized as revenue equally over the next two fiscal years.
6. The common stock represents 400,000 shares of no par stock authorized, 250,000 shares issued and outstanding.
Required:
Prepare a complete, corrected, classified balance sheet. Include headings for each classification, as well as titles for each classification’s subtotal. An example of a classified balance sheet can be found in the Concept Review Exercise at the end of Part A of this chapter.
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