The preparation of the classified balance sheet for Catena's Marketing Company is as follows:
Catena's Marketing Company
Classified Balance Sheet
At the end of the current year
Assets:
<u>Current assets</u>:
Cash $ 1,550
Accounts receivable 2,240
Interest receivable 121
Prepaid insurance 1,640
Total current assets $5,551
<u>Long-term assets:</u>
Long-term notes receivable $2,820
Equipment $15,100
Accumulated depreciation (2,940) 12,160
Total long-term assets $14,980
Total assets $20,531
Liabilities and Equity:
Liabilities:
<u>Current Liabilities:</u>
Accounts payable $2,240
Dividends payable 640
Accrued expenses payable 3,800
Income taxes payable 2,520
Unearned rent revenue 320
Total current liabilities $9,520
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<u>Equity:</u>
Common Stock (800 shares) $80
Additional paid-in capital 3,500
Retained earnings 7,431 $11,011
Total liabilities and equity $20,531
<h3>Preparing the Classified Balance Sheet:</h3>
To prepare the classified Balance Sheet of Catena's Marketing Company, we must first determine the net income and the ending retained earnings as follows:
<h3>Income Statement</h3>
For the current year
Sales revenue $37, 350
Interest revenue 150
Rent revenue 600
Total revenue $38,100
Expenses:
Wages expense 18,100
Depreciation expense 1,789
Utilities expense 340
Insurance expense 750
Rent expense 9,300
Income tax expense 2,720 32,999
Net income $5,101
<h3>Statement of Retained Earnings</h3>
For the current year
Retained earnings (previous year) $2,330
Net income 5,101
Retained earnings (current year) $7,431
Note that the effect of the cash dividends declared was already included in the Retained earnings of $2,530.
<h3>Data and Calculations:</h3>
Catena's Marketing Company
Adjusted Trial Balance
End of the Current Year Debit Credit
Cash $ 1,550
Accounts receivable 2,240
Interest receivable 121
Prepaid insurance 1,640
Long-term notes receivable 2,820
Equipment 15,100
Accumulated depreciation $ 2,940
Accounts payable 2,240
Dividends payable 640
Accrued expenses payable 3,800
Income taxes payable 2,520
Unearned rent revenue 320
Common Stock (800 shares) 80
Additional paid-in capital 3,500
Retained earnings 2,330
Sales revenue 37, 350
Interest revenue 150
Rent revenue 600
Wages expense 18,100
Depreciation expense 1,789
Utilities expense 340
Insurance expense 750
Rent expense 9,300
Income tax expense 2,720
Total $ 56,470 $ 56,470
Required:
Prepare a classified Balance Sheet at the end of the current year.
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