On the condensed balance sheet, show all receivables (other than the claims against customers on note and open account) under the title “Other Accounts Receivable,” immediately following but separate from the current asset group. Carry all inventories under one title “Inventories.” All fixed assets, except the intangibles, show under the title “Plant and Equipment,” from which show deducted the total of the various depreciation reserves. List the intangible assets individually. Set up supporting schedules for all condensations effected. The profit and loss statement must have supporting schedules, also.
Although some inaccuracies result from using the bases indicated for the calculation of depreciation, they are insignificant. Note that the basis for writing down patents has been changed since the last period. This indicates a policy of intention to secure patented improvements on the various devices owned. ([See Chapter XVIII] for discussion of this point.)
Declaration of a dividend on common stock means, of course, that the required dividends on both issues of preferred have also been authorized. The student is required to calculate the rates on these.
XXVII-XXVIII
Practice Data
Adjust and close the books in accordance with the data given in assignments XXV-XXVI.
Treat the account “Knoxfrauds Manufactured” as a purchase account as explained in assignment XXIV.
Handle the estimate of 1¼% of trade debtors for expected sales discounts, as an accrued item in Sales Discount account.
There is no accrual on sinking fund provisions, inasmuch as the trust deed requires that payment out of profits be made at the close of the fiscal period and not at the time bond interest falls due.
The Knox-Davis blanks, with all statements, are due at the time of the last class period and must be turned in whether completed or not, if credit is desired for the course.