The following accounts and account balances are taken from the records of Joyes Enterprises Ltd. at December 31, 2016.
|
Account |
2016 |
2015 |
|
Accounts payable |
$ 7,000 |
$ 4,000 |
|
Accounts receivable |
5,000 |
3,000 |
|
Notes receivable |
3,000 |
2,000 |
|
Bank loan |
5,000 |
5,000 |
|
Building |
24,000 |
20,000 |
|
Cash |
2,000 |
1,000 |
|
Dividends |
1,000 |
-0- |
|
Equipment |
16,000 |
12,000 |
|
Income taxes payable |
3,000 |
2,500 |
|
Land |
5,000 |
5,000 |
|
Merchandize inventory |
19,000 |
24,500 |
|
Mortgage payable |
5,000 |
7,000 |
|
Prepaid insurance |
1,000 |
1,000 |
|
Share capital |
48,000 |
48,000 |
|
Retained earnings, start of year |
2,000 |
1,000 |
|
Net income |
? |
? |
Other information:
|
a. |
One-half of the notes receivable at December 31, 2016 will be received in cash during 2017. All of the notes receivable at December 31, 2015 were received in cash during 2016. |
|
b. |
$1,000 of the bank loan and $2,000 of the mortgage payable must be repaid by December 31, 2017. |
Required:
- Calculate net income for 2015 and 2016.
- Prepare a classified balance sheet. Assume all accounts have normal balances. Disclose all amounts separately on the balance sheet.
- Does Joyes Enterprises Ltd. have sufficient resources to meet its current obligations in 2017?
- Refer to BDCC’s note 4 shown in this chapter. Assume now that Joyes’ property, plant, and equipment are combined into one amount on the balance sheet. Prepare a suitable note to the financial statements. Assume there are no additions to PPE in 2015, and that there is no depreciation calculated for either year.
- 1182 reads
