Question - Balance Sheet Adjustment and Preparation

The adjusted trial balance of Eastwood Company and other related information for the year 2010 are presented on the next page.

EASTWOOD COMPANY Adjusted Trial Balance December 31, 2010

Debits Credits

Cash $ 41,000

Accounts Receivable 163,500

Allowance for Doubtful Accounts $ 8,700

Prepaid Insurance 5,900

Inventory 208,500

Long-term Investments 339,000

Land 85,000

Construction Work in Progress 124,000

Patents 36,000

Equipment 400,000

Accumulated Depreciation of Equipment 240,000

Unamortized Discount on Bonds Payable 20,000

Accounts Payable 148,000

Accrued Expenses 49,200

Notes Payable 94,000

Bonds Payable 200,000

Common Stock 500,000

Paid-in Capital in Excess of Par-Common Stock 45,000

Retained Earnings 138,000

$1,422,900 $1,422,900

Additional information:

1. The LIFO method of inventory value is used.

2. The cost and fair value of the long-term investments that consist of stocks and bonds is the same.

3. The amount of the Construction Work in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $85,000, as shown in the trial balance.

4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis.

5. Of the unamortized discount on bonds payable, $2,000 will be amortized in 2011.

6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2011.

7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2021.

8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding.

Instructions - Prepare a balance sheet as of December 31, 2010, so that all important information is fully disclosed.