Condensed financial data of Gorni Company appear below:
GORNI COMPANY
Comparative Balance Sheet
December 31 | | 2017 | 2016 | | Assets | | Cash | $70,000 | $35,000 | | Accounts receivable | 82,000 | 53,000 | | Inventories | 120,000 | 132,000 | | Prepaid expenses | 19,000 | 25,000 | | Investments | 80,000 | 65,000 | | Plant assets | 310,000 | 250,000 | | Accumulated depreciation | (65,000 | ) | (60,000 | ) | | Total | $616,000 | | $500,000 | | | Liabilities and Stockholder's Equity | | Accounts payable | $85,000 | $75,000 | | Accrued expenses payable | 22,000 | 24,000 | | Bonds payable | 130,000 | 150,000 | | Common stock | 245,000 | 170,000 | | Retained earnings | 134,000 | 81,000 | | Total | $616,000 | | $500,000 | |
GORNI COMPANY
Income Statement
For the Year Ended December 31, 2017 | | Sales | $480,000 | | Less: | | Cost of goods sold | $290,000 | | Operating expenses (exculding depreciation) | 60,000 | | Depreciation expense | 17,000 | | Income taxes | 15,000 | | Interest expense | 13,000 | | Loss on disposal of plant assets | 8,000 | 403,000 | | Net income | $77,000 |
| Additional information: | | 1. | New plant assets costing $85,000 were purchased for cash in 2017. | | 2. | Old plant assets costing $25,000 were sold for $5,000 cash when book value was $13,000. | | 3. | Bonds with a face value of $20,000 were converted into $20,000 of common stock. | | 4. | A cash dividend of $24,000 was declared and paid during the year. | | 5. | Accounts payable pertain to merchandise purchases. |
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Solution: ACC 201 Condensed financial data of Gorni Company appear below: