Question

These items are taken from the financial statements of Sunland Company on December 31, 2022.Buildings $107,916Accounts receivable 12,852Prepaid insurance 3,264Cash 12,077Equipment 84,048Land 62,424Insurance expense 796Depreciation expense 5,406Interest expense 2,652Common stock 61,200Retained earnings (January 1, 2017) 40,801Accumulated depreciation-buildings 46,512Accounts payable 9,690Notes payable 95,472Accumulated depreciation-equipment 19,094Interest payable 3,672Service revenue 14,994Prepare a classified balance sheet. Assume that $13,872 of the note payable will be paid in 2018. (List current assets in order of liquidity and property plant and equipment in order of the land, buildings, and equipment)

Answer 1

Answer:

Balance sheet

as December 31th, 2018

Assets

Current Assets

Cash                           12,077

Accounts receivable 12,852

Prepaid insurance      3,264  

Total current               28,193

Non current Assets

Land                          62,424  

Buildings                   107,916

Acc dep-equipment (19,094)

Equipment                 84,048

Acc dep-buildings   (46,512)  

Total non current      188,782

Total Assets               216,975

Liabilities

Current Liabilities

Accounts payable 9,690

Notes payable      13,872

Interest payable    3,672  

Total current:        27,234

Non current liabilities

Note Payable        81,600

Total Liabilities    108,834

Equity

Common stock      61,200

Retained earnings 46,941

Total Equity            108,141

Total Liablities and stockholders equity 216,975

Explanation:

We have to determinate net icnoem and add it to the retained earnings.

Net income:

Service revenue           14,994

Insurance expense          (796)

Depreciation expense (5,406)

Interest expense          (2,652)  

Net income                    6, 140

Retained earnings (January 1, 2017) 40,801

+ net income                                         6,140  

Retained earnings (Dec 31th, 2017) 46,941

Then we post the assets considerending liquidity.

We should make sure that liabilities and equity matches assets to know the accounting equation:

Assets = liabilities + equity is correct.