Question

The following is the ending balances of accounts at December 31, 2018 for the Weismuller Publishing Company.

Answer 1

Answer:

Weismuller Publishing Company

A Classified Balance Sheet at December 31, 2018

Assets:

Current Assets:

Cash                                                $77,000

Accounts Receivable   172,000

less allowance             22,000      150,000

Investments                                    152,000

Inventories                                      291,000

Prepaid Expenses                           94,000         $764,000

Long-term Assets:

Prepaid Expenses                           66,000

Machinery & Equipment 332,000

less Accumulated Depr.  116,000 216,000       $282,000

Total Assets                                                      $1,046,000

Current Liabilities:

Accounts payable                        $66,000

Interest payable                             26,000

Deferred revenue                          86,000

Taxes payable                                36,000

Notes payable:

   Six months                 46,000

   One year                   26,000    72,000          $286,000

Long-term Liabilities:

Notes payable:

   Two or more years              52,000

   Six years                              106,000              $158,000

Total Liabilities                                                   $444,000

Equity:

Authorized Common Stock, 700,000 shares

Issued Common Stock       $406,000

Retained Earnings                 196,000             $602,000

Total Liabilities + Equity                               $1,046,000

Explanation:

a) Prepaid Expenses are classified as follows:

Current Assets: $160,000 - $66,000 = $94,000

Long-Term Assets = $66,000 ($132,000/2)

Since a year's lease is due in the next year.

b) Investments are classified as current because they include treasury bills maturing on January 30, 2019, and marketable securities saleable next year.

c) Deferred Revenue is a current liability.

d) The classifications of notes payable are indicated in the balance sheet.