Question

These items are taken from the financial statements of Whispering Winds Corp. at December 31, 2017. $103,684 12,348 3,136 11,603 80,752 59,976 764 Buildings Accounts receivable Prepaid insurance Cash Equipment Land Insurance expense Depreciation expense Interest expense Common stock Retained earnings (January 1, 2017) Accumulated depreciation-buildings Accounts payable Notes payable Accumulated depreciation equipment Interest payable Service revenue 5,194 2,548 58,800 39,199 44,688 9,310 91,728 18,346 3,528 14,406 Prepare a classified balance sheet. Assume that $13,328 of the note payable will be paid in 2018. (List current assets in order of liquidity and property plant and equipment in order of land, buildings and equipment.)

Answer 1

Assets

Current assets
... Cash		$11,603
... Accounts receivables		$12,348
... Prepaid insurance		$3,136
Total Current Assets			$27,087
Property, plant and equipment
... Land		$59,976
... Building	$103,684
..(-) Accumulated depreciation (building)	$44,688	$58,996
... Equipment	$80,752
.. (-) Accumulated depreciation (equipment)	$18,346	$62,406	$181,378
Total assets			$208,465

Liabilities and shareholder equity

Current liabilities
... Notes payable		$13,328
... Accounts payable		$9,310
... Interest payable		$3,528
Total Current liabilities			$26,166
Long term liabilities
... Notes payable			$78,400
Total liabilities			$104,566
Shareholder equity
... Common stock		$58,800
... Retained earnings ($39,199 + $5,900*)		$45,099
Total shareholders Equity			$103,899
Total liabilities and shareholders equity			$208,465

*Net income = Service Revenue - insurance expense - Depreciation expense - interest expense

= $14,406 - $764 - $5,194 - $2,548

= $5,900