Question

The December 31, 2018, adjusted trial balance for Fightin' Blue Hens Corporation is presented below.Accounts Debit CreditCash $10,000 Accounts Receivable 130,000 Prepaid Rent 4,000 Supplies 20,000 Equipment 200,000 Accumulated Depreciation $115,000Accounts Payable 10,000Salaries Payable 9,000Interest Payable 3,000Notes Payable (due in two years) 20,000Common stock 100,000Retained Earnings 40,000Service Revenue 300,000Salaries Expense 200,000 Rent Expense 10,000 Depreciation Expense 20,000 Interest Expense 3,000 Totals $597000 $597,0001. Prepare a statment of stockholder equity for the year ends Desember 31, 2018, assuming no common stock was issued during 2018.2. Prepare a classified blance sheet as of December 31, 2018.

Answer 1

Answer:

These can be prepared as shown below:

Explanation:

1. Prepare a statement of stockholder equity for the year ends December 31, 2018, assuming no common stock was issued during 2018.

To do this, the income statement is first prepared by ignoring tax as follows:

Fightin' Blue Hens Corporation

Income Statement

for the year ended December 31, 2018.

Details                                                                    $

Service Revenue                                           300,000

Salaries Expense                                         (200,000)

Rent Expense                                                  (10,000)

Depreciation Expense                                   (20,000)

Interest Expense                                             (3,000)

Earnings for the year                                      67,000

Therefore, we have:

Fightin' Blue Hens Corporation

Statement of Stockholder Equity

for the year ends December 31, 2018

Details                                                                    $

Common stock                                               100,000

Retained Earnings                                           40,000

Earnings for the year                                       67,000

Stockholder Equity                                       207,000

2. Prepare a classified balance sheet as of December 31, 2018.

A balance sheet is a balance sheet that have different classifications suchas fixed assets, current assets and liabilities, long-term liabilities, and stockholder equity. This can be prepared as follows:

Fightin' Blue Hens Corporation

Classified Balance Sheet

for the year ends December 31, 2018

Details                                                          $                   $

Fixed Assets

Equipment                                           200,000

Accumulated Depreciation                 (115,000)    

Net Fixed Assets                                                          85,000  

Current Assets

Cash                                                        10,000

Accounts Receivable                           130,000

Prepaid Rent                                            4,000

Supplies                                                20,000

Total current assets                             164,000

Current Liabilities

Accounts Payable                                (10,000)

Salaries Payable                                    (9,000)

Interest Payable                                     (3,000)

Working capital                                                            142,000

Long-term Liabilities

Notes Payable (due in two years)                               (20,000)

Net Total Assets                                                         207,000

Financed by:

Common stock                                                              100,000

Retained Earnings                                                          40,000

Earnings for the year                                                      67,000

Stockholder Equity                                                       207,000

Note: When a balance sheet is accurately prepared, the net total assets and the stockholder equity must be equal as above with both equaling $207,000.