Answer:
HUBBARD CORPORATION
Balance Sheet
At December 31, 2021
Assets
Current assets:
Cash $63,000
Accounts receivable (net) $126,000
Inventory $163,000
Short term investments - AFS securities $23,000
Total current assets: $375,000
Investment in equity securities $43,000
Patent (net) $103,000
Machinery $283,000
Assets Buildings $753,000
Accumulated depreciation ($258,000)
Land $186,000
Total assets $1,485,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $218,000
Current portion of long term debt $32,500
Total current liabilities: $250,500
Notes payable 473,500
Common stock (authorized and issued 103,000 shares of no par stock) $412,000
Retained earnings $349,000
Total liabilities and shareholders' equity $1,485,000
Explanation:
1. The buildings, land, and machinery are all stated at cost except for a parcel of land that the company is holding for future sale. The land originally cost $53,000 but, due to a significant increase in market value, is listed at $126,000. The increase in the land account was credited to retained earnings.
Dr Retained earnings 73,000
Cr Land 73,000
Assets must be reported at historical cost.
2. The investment in equity securities account consists of stocks of other corporations and are recorded at cost, $23,000 of which will be sold in the coming year. The remainder will be held indefinitely.
Dr Short term investments - AFS securities 23,000
Cr Investment in securities 23,000
It doesn't change the value of the assets, it just organizes them properly.
3. Notes payable are all long term. However, a $130,000 note requires an installment payment of $32,500 due in the coming year.
Dr Notes payable 32,500
Cr Current portion of long term debt 32,500
4. Inventory is recorded at current resale value. The original cost of the inventory is $163,000.
Dr Inventory change 83,000
Cr Inventory 83,000
Inventory must be recorded at lesser of cost or market value.
