The Following Is the Balance Sheet of Columbus Corporation Immediately

question 14

Essay

The following is the balance sheet of Columbus Corporation immediately prior to deciding how to finance the purchase of an additional $210,000 parcel of land. Answer the question that follows.
Columbus Corporation
Balance Sheet
December 31, 2018
$\begin{array}{lr}\text { Assets }\\\text { Cash } & \$ 180,000 \\\text { Accounts receivable } & 60,000 \\\text { Land } & \underline{270,000} \\\quad \text { Total assets } & \underline{\$ 510,000}\\\text { Liabilities and Shareholders' Equity }\\\text { Accounts payable } & \$ 90,000 \\\text { Contributed capital } & 250,000 \\\text { Retained earnings } & 170,000 \\\text { Total liabilities \& shareholders' equity }&\$510,000\end{array}$
REQUIRED: Columbus will finance the $210,000 investment in land by issuing either $210,000 of common stock or using $210,000 of additional accounts payable that will be due in 90 days. Indicate which method of financing is preferable for Columbus. Consider the effects on short-term solvency positions.

Learn the criteria for revenue recognition, especially in scenarios involving rights of return and collectibility issues.

Distinguish between cash, cash equivalents, and other types of financial assets and their implications on balance sheet presentation.

Acquire knowledge on the determination and reporting of the total cash balance on the balance sheet.

Comprehend the classification and reporting requirements for trade and nontrade receivables.

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