Question

Consider the following account balances of Evan McGruder, Inc., as of December 31, Year 3: Accounts Payable $ 114,340Retained Earnings 55,800Equipment 422,700Notes Payable, due Year 5 344,300 Common Stock 205,500Accounts Receivable 203,600Income Tax Payable 4,010Cash 97,650Required: Prepare a classified balance sheet at June 30, Year 3

Answer 1

Answer:

YEAR 3 Balance Sheet

$97,650   Cash

$203,600 Accounts Receivable

$301,250  TOTAL CURRENT ASSETS  

$422,700 Equipment

$422,700  TOTAL NONCURRENT ASSETS  

$723,950  TOTAL ASSETS  

$114,340   Accounts Payable  

$4,010       Income Tax Payable  

$118,350    TOTAL CURRENT LIABILITIES  

$344,300  Notes Payable  

$344,300  TOTAL NONCURRENT LIABILITIES  

$462,650  TOTAL LIABILITIES  

$55,800   Retained Earnings  

$205,500  Common Stock  

$261,300  TOTAL EQUITY  

$723,950  TOTAL EQUITY + LIABILITIES  

Explanation:

Account of Current Assets , the criteria is to have a liquidity speed less than one year, which means it's possible to get cash from these accounts before a year period.

"Liquidity is defined as the speed of the assets that will be converted into cash, Assets that take less days to buy or sell are more liquid than others."