Assignment task:
The Balance Sheet (including notes) presented below has been submitted to you by an inexperienced bookkeeper. Prepare a corrected balance sheet (including notes). Consider formatting, terminology deficiencies, and classification inaccuracies in your corrections. Fixed Assets-Tangible Tom Brady Builders, Inc. Balance Sheet For the Period Ended 12/31/25 Assets Equipment $110,000 Less: reserve for depreciation (40,000) $ 70,000 Factory supplies 22,000 Land and buildings 400,000 Less: reserve for depreciation (140,000) 260,000 Plant site held for future use 90,000 $ 442,000 Current Assets Accounts receivable 175,000 Cash 80,000 Inventory 220,000 Treasury stock (at cost) 20,000 495,000 Fixed Assets--Intangible Goodwill 80,000 Notes receivable 40,000 Patents 26,000 146,000 Deferred Charges Advances to salespersons 60,000 Prepaid rent 27,000 Returnable containers 75,000 162,000 TOTAL ASSETS $1,245,000 Liabilities Current Liabilities Accounts payable $140,000 Allowance for doubtful accounts 8,000 Common stock dividend distributable 35,000 Income tax payable 42,000 Sales tax payable 17,000 $ 242,000 Long-term Liabilities, 5% debenture bonds, due 2030 500,000 Reserve for contingencies 160,000 660,000 TOTAL LIABILITIES 902,000 Equity Capital stock, $10 par value, issued 12,000 shares with 60 shares held as treasury stock $150,000 Capitalsurplus 90,000 Dividends paid (20,000) Earned surplus 123,000 TOTAL EQUITY 343,000 TOTAL LIABILITIES AND EQUITY $1,245,000
Note 1. The reserve for contingencies has been created by chargesto earned surplus and has been established to provide a cushion for future uncertainties.
Note 2. The inventory account includes only items physically present at the main plant and warehouse. Items located at the company's branch sales office amounting to $40,000 are excluded since the company has consistently followed this procedure for many years