Classwork #08 – Focus on re-opened accounts

The service company Monroe&co has the following balance sheet at the beginning of a period (T):

Current Assets Current Liabilities

Cash 88,000 Short-term debt 75,000
Tax Receivable 22,000

Fixed Assets Non-current Liabilities

Tangible Assets Long-term borrowings 57,000
Buildings 92,000
Plants 45,000
Intangible Assets Shareholders’ Equity
License 12,000 Capital shares 100,000
Brand 6,000 Accumulated Earnings 33,000

Total Assets 265,000 Total Liabilities and Equity 265,000

Record the following transactions and obtain the Balance Sheet and Income Statement at the end
of the accounting period T.

1) They pay annual interests on a loan that last 20 years. The loan was originally stipulated
the year before (T-1) by 60,000. The interest rate is 1.5% (Interests were paid
immediately).
2) Monroe&co purchases 23,000 of raw materials immediatedy paid.
3) Monroe&co sells 65,000 of finished products, receiving cash by 40%.

Information necessary to adjust entries

a) The depreciation rate of Buildings is 5%, of Plants is 8%
b) The amortization rate of Brand is 2%, of License is 5%
c) At the end of T, the fair value of the Buildings is 85,000 and the fair value of the Plants is
43,000
d) Brand is revaluated comes to 10,000
e) Tax rate 25% (Revaluation of Brand is not taxable)
f) Dividends are paid by 10% of the Final Net Income

Prepare the financial statements and, then, determine the values of Current Assets, Fixed Assets,
Current Liabilities, Non-Current Liabilites and Equity
 BALANCE SHEET period T
Current Assets Current Liabilities

Fixed Assets Non-current Liabilities

Tangible Assets

Intangible Assets Shareholders’ Equity

Total Liabilities
Total Assets and Equity
 INCOME STATEMENT period T
Current Expenses (COSTS) Revenues

Total Costs Total Revenues

Net Income (Net Loss)