As Controller for Henderson, You Are Attempting to Reconstruct and Revise

question 4

Essay

As controller for Henderson, you are attempting to reconstruct and revise the following balance sheet prepared by a staff accountant. Additional information ($ in 000s):
1. Certain records that included the account balances for the franchise and shareholders' equity items were lost. However, a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.5. That is, total liabilities are 150% of total shareholders' equity. Retained earnings at the beginning of the year was $4,300. Net income for 2013 was $2,500 and $800 in cash dividends were declared and paid to shareholders.
2. The investments represent treasury bills purchased in December that mature in January. These are considered cash equivalents.
3. Interest on both the note and the bonds is payable annually.
4. The note payable is due in annual installments of $800 each.
5. Unearned revenue will be earned equally over the next 18 months.
6. The common stock represents 500,000 shares of no par stock authorized, 300,000 shares issued and outstanding.
Required:
Prepare a complete, corrected, classified balance sheet.

---

Definitions:

Public Funds

Resources collected by government bodies through taxation, fees, fines, and other means, intended for public use and expenditure.

White-collar Crime

Non-violent crime committed by individuals or corporations in the course of their professional lives, often involving financial deception.

Operating Activities

The core activities of a business that relate to providing goods and/or services, generating revenue, and incurring expenses.

Goods and Services

Goods and services encompass all the physical products (goods) and activities (services) that can be offered in an economy for purchase.