Question

These items are taken from the financial statements of Windsor, Inc. at December 31, 2017.Buildings$97,336Accounts receivable11,592Prepaid insurance2,944Cash10,893Equipment75,808Land56,304Insurance expense718Depreciation expense4,876Interest expense2,392Common stock55,200Retained earnings (January 1, 2017)36,801Accumulated depreciation—buildings41,952Accounts payable8,740Notes payable86,112Accumulated depreciation—equipment17,222Interest payable3,312Service revenue13,524Prepare a classified balance sheet. Assume that $12,512 of the note payable will be paid in 2018. (List current assets in order of liquidity and property plant and equipment in order of land, buildings and equipment.)

Answer 1

Answer:

Explanation:

In the classified balance sheet, we summarize the asset and liabilities into various types

Like assets are divided into fixed assets, current assets, and intangible assets.

Likewise, liabilities are also divided into current liabilities, long term liabilities

In every balance sheet, the accounting equation is used that means

Total assets = Total liabilities + Shareholder equity

Before preparing the classified balance sheet first, we have to compute the net income or loss and then, accordingly finding out the ending balance of retained earnings. The calculation is shown below:

Net income = Service revenue - Insurance expense - Interest expense - depreciation expense

= $13,524 - $718 - $2,392 - $4,876

= $5,538

And, the ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

= $36,810 + $5,538 - $0

= $42,339

The preparation of the classified balance sheet for Libby corporation on December 31, 2011 is presented in the spreadsheet. Kindly find the attachment below: