Question

The general ledger of Red Storm Cleaners at January 1, 2021, includes the following account balances:

Accounts	Debits				Credits
Cash	$	17,500
Accounts Receivable		7,500
Supplies		3,500
Equipment		12,500
Accumulated Depreciation					$	4,000
Salaries Payable						6,000
Common Stock						22,500
Retained Earnings						8,500
Totals	$	41,000			$	41,000

The following is a summary of the transactions for the year:

1.		March		12		Provide services to customers, $55,000, of which $20,500 is on account.
2.		May		2		Collect on accounts receivable, $17,500.
3.		June		30		Issue shares of common stock in exchange for $4,000 cash.
4.		August		1		Pay salaries of $6,000 from 2020 (prior year).
5.		September		25		Pay repairs and maintenance expenses, $12,500.
6.		October		19		Purchase equipment for $7,500 cash.
7.		December		30		Pay $1,200 cash dividends to stockholders.

8-b. Prepare the classified balance sheet for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

The classified balance sheet is shown below:

ASSETS		LIABILITIES
Current assets:		Current liabilities:
Cash	46,300	Salaries payable	0
Accounts Receivable	10,500	Total current liabilities	0
Supplies	3,500	Total long term liabilities	0
Total current assets	60,300	Total liabilities	0
Fixed assets:		Owner's equity:
Equipment	20,000	Common stock	26,500
Accumulated depreciation	-4,000	Retained earnings	49,800
Total fixed assets	16,000	Total owner's equity	76,300
Total assets	76,300	Total liabilities and owner's equity	76,300

The formulas used can be seen below:

W 101 ASSETS 102 Current assets: 103 Cash =17500+(55000-20500) +17500+4000-6000-12500-7500-1200 104 Accounts Receivable =7500+(20500-17500) 105 Supplies 3500 106 Total current assets =X103+X104+X105 107 Fixed assets: 108 Equipment =12500+7500 109 Accumulated depreciation -4000 110 Total fixed assets =X108+X109 111 Total assets =X110+X106 112 113 LIABILITIES Current liabilities: Salaries payable Total current liabilities Total long term liabilities Total liabilities Owner's equity: Common stock Retained earnings Total owner's equity Total liabilities and owner's equity =22500+4000 =8500+55000-12500-1200 =Z108+Z109 =7110 Է Ե Ե