Question

Terracotta Incorporated reported the following accounts and amounts (in millions) in its financial statements for the year ended December 2, 2016. $ Accounts Payable Accounts Receivable Accumulated Amortization Accumulated Depreciation Allowance for Doubtful Accounts Cash and Cash Equivalents Common Stock Deferred Revenue Equipment Income Taxes Payable Notes Payable (long-term) Notes Receivable (long-term) Prepaid Rent Retained Earnings Service Revenue Short-Term Investments Software 830 860 490 1,120 20 1,020 460 1,980 7,430 2,570 240 260 7,070 Ooo Prepare a classified balance sheet. The Allowance for Doubtful Accounts relates entirely to Accounts Receivable. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Solution:

Classified Balance Sheet of Terracotta, Inc.

TERRACOTTA, INC.
Balance Sheet
As of December 2,2016
(in millions of dollars)
Assets
Current assets:
Cash and cash Equivalents		$          1,020
Prepaid Rent		$              260
Accounts receivable	$             860
Allowance for doubtful accounts	$             (20)
Accounts Receivable, Net of Allowance		$              840
Short Term Investments		$          3,850
Total current assets		$          5,970
Long-term investments
Notes receivable		$              240
Property,plant, and equipment:
Equipment	$         7,430
Less: Accumulated Depreciation	$       (1,120)
Equipment, net of accumulated depreciation		$          6,310
Intangible assets:
Software	$             900
Less: Accumulated Amortization	$           (490)
Software, net of accumulated amortization		$              410
Total assets		$        12,930
Liabilities and Stockholders Equity
Current liabilities:
Accounts payable		$              830
Deferred Revenue		$          1,980
Income tax payable		$                20
Total current liabilities		$          2,830
Long-term liabilities
Notes payable		$          2,570
Total long-term liabilities		$          2,570
Total liabilities		$          5,400
Stockholder's equity:
Common stock		$              460
Retained earnings		$          7,070
Total stockholder's equity		$          7,530
Total liabilities and stockholder's equity		$        12,930

Notes:

1) Service Revenue is not a balance sheet item. So, not considered here.