Question

Required information Use the following information for Quick Studies below. (The following information applies to the questions displayed below.) The following is the adjusted trial balance of Sierra Company. Account Title Cash Prepaid insurance Notes receivable (due in 5 years) Buildings Accumulated depreciation-Buildings Accounts payable Notes payable (due in 3 years) Common stock Retained earnings Dividends Consulting revenue Wages expense Depreciation expense-Buildings Insurance expense Totals Debit Credit $ 33,000 1,900 6,800 90,000 $ 26,000 9,500 10,000 12,000 19,500 8,000 79,500 4,900 9,000 2,900 $156,500 $156,500 QS 3-23 Preparing a classified balance sheet LO C3 Use the information adjusted trial balance to prepare Sierra Company's classified balance sheet as of December 31.

Answer 1

SIERRA COMPANY

BALANCE SHEET

DECEMBER 31

ASSETS

CURRENT ASSETS:
Cash	$ 33,000
Prepaid insurance	$ 1,900
TOTAL CURRENT ASSETS (1)	$ 34,900
LONG TERM ASSETS:
Notes receivables (2)	$ 6,800
PROPERTY PLANT AND EQUIPMENT:
Buildings. $ 90,000
Less: Accumulated Depreciation ( $ 26,000). (3)	$ 64,000
TOTAL ASSETS (1+2+3)	$ 105,700

LIABILITIES

CURRENT LIABILITIES:
Accounts payable	$ 9,500
TOTAL CURRENT LIABILITIES (1)	$ 9,500
LONG TERM LIABILITIES:
Notes payable	$ 10,000
TOTAL LONG TERM LIABILITIES (2)	$ 10,000
TOTAL LIABILITIES (1+2)	$ 19,500

STOCKHOLDERS EQUITY

Common stock	$ 12,000
Add: Ending retained earnings	$ 74,200
TOTAL EQUITY	$ 86,200
TOTAL LIABILITIES AND EQUITY	$ 105,700

Net income = consulting revenue - wages expense - depreciation expense - insurance expense

Net income = 79,500 - 4,900 - 9,000 - 2,900

Net income = $ 62,700.

Ending retained earnings = beginning retained earnings + net income - dividend

Ending retained earnings = 19,500 + 62,700 - 8,000

Ending retained earnings = $ 74,200.

SUMMARY:

First need to compute net income during the period. Then need to compute the changes in retained earnings by adding net income along with opening retained earnings and then subtracting dividend.