Question

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E2-5 These items are taken from the financial statements of Longhom Co, at December 31, 2017 $105,800 12,600 Buildings Accounts receivable Prepaid insurance Cash 3,200 11,840 Equipment 82,400 Land 61,200 780 Insurance expense Depreciation expense Interest expense Common stock Retained camnings (January 1, 2017) Accumulated depreciation buildings Accounts payable Notes payable Accumulated depreciation equipment Interest payable Service revenue Instructions Prepare a classified balance sheet. Assume that $13.600 of the note payable will be paid in 2018 5,300 2,600 60,000 40,000 45,600 9,500 93,600 18,720 3,600 14,700

Answer 1

Solution: 11840 12600 3200 LONGHORN COMPANY Balance Sheet December 31, 2017 Assets Current assets Cash Accounts receivable Prepaid insurance Total current assets Property, plant, and equipment Land Buildings Less: Accumulated depreciation - buildings Equipment Less: Accumulated depreciation - equipment Total assets 27640 61200 105800 45600 60200 82400 18720 63680 185080 212720 9500 13600 3600 26700 Liabilities and Stockholders' Equity Current liabilities Accounts payable Current maturity of note payable Interest payable Total current liabilities Long-term liabilities Note payable (93600 - 13600) Total liabilities Stockholders' equity Common stock Retained earnings (Note 1) Total stockholders' equity Total liabilities and stockholders' equity 80000 106700 60000 46020 s equity 106020 212720

14700 Note 1: Income Statement For the Year Ended December 31, 2017 Revenues Service revenue Expenses: Insurance expense 780 Depreciation Expense 5300 Interest expense 2600 Total expenses Net income 8680 6020 Statement of Retained earnings For the Year Ended December 31, 2017 Retained earnings at beginning Add: Net income Retained earnings at end 40000 6020 46020