Table 1(Use this table for questions (1-5) Smith Company Balance Sheet - 1425

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Smith Company Balance Sheet

 

                                                                       Assets:

Cash and marketable securities                    $300,000

Accounts receivable                                                    2,215,000

Inventories                                                                  1,837,500

Prepaid expenses                                                           24,000

Total current assets                                             $3,286,500

Fixed assets                                                                 2,700,000

Less: accumulated depreciation                          1,087,500

Net fixed assets                                                     $1,612,500

Total assets                                                            $4,899,000

Liabilities:

Accounts payable                                                     $240,000

Notes payable                                                                 825,000

Accrued taxes                                                                                                   42,500

Total current liabilities                                         $1,107,000

Long-term debt                                                           975,000

Owner’s equity                                                         2,817,000

Total liabilities and owner’s equity                     $4,899,000

Net sales (all credit)                                               $6,375,000

Less: Cost of goods sold                                          4,312,500

Selling and administrative expense                       1,387,500

Depreciation expense                                                  135,000

Interest expense                                                           127,000

Earnings before taxes                                                $412,500

Income taxes                                                                 225,000

Net income                                                                  $187,500

Common stock dividends                                            $97,500

Change in retained earnings                                       $90,000

Solution Description

 

Table 1(Use this table for questions (1-5)

 

Smith Company Balance Sheet

 

                                                                       Assets:

Cash and marketable securities                    $300,000

Accounts receivable                                                    2,215,000

Inventories                                                                  1,837,500

Prepaid expenses                                                           24,000

Total current assets                                             $3,286,500

Fixed assets                                                                 2,700,000

Less: accumulated depreciation                          1,087,500

Net fixed assets                        &nbs