Question

These items are taken from the financial statements of Wildhorse Co. at December 31, 2022. Buildings Accounts receivable Prepaid insurance Cash Equipment Land Insurance expense Depreciation expense Interest expense Common stock Retained earnings (January 1, 2022) Accumulated depreciation--buildings Accounts payable Notes payable Accumulated depreciation-equipment Interest payable Service revenue $129,076 15,372 3,904 14,445 100,528 74,664 952 6,466 3,172 73,200 48,801 55,632 11,590 114,192 22,838 4,392 17,934 Prepare a classified balance sheet. Assume that $16,592 of the note payable will be paid in 2023. (List Current Assets in order of liquidity and Property. Plant and Fauipment in order of Land, Buildings and Equipment,

Answer 1

Before Preparing Classified Balance Sheet we need to prepare Income Statement and Statement of Retained Earnings, then prepare Classified Balance Sheet, because all these Financial Statements are related to each other. These are prepared in an order like Income Statement, Statement of Retained Earnings and then Classified Balance Sheet.

Wildhorse Co.

Income Statement

December 31,2022

Accounts	Amount	Amount
Service Revenue		$17,934
Less:- Expenses
Insurance Expense	$952
Depreciation Expense	6,466
Interest Expense	3,172
Total Expenses		$(10,590)
Net Income		$7,344

Wildhorse Co.

Statement of Retained Earnings

December 31,2022

Accounts	Amount
Retained Earnings (January 1,2022)	$48,801
Add:- Net Income	7,344
Retained Earnings (December 31,2022)	$56,145

Wildhorse Co.

Classified Balance Sheet

December 31,2022

Accounts	Amount	Amount
Assets:-
Current Assets:-
Cash	$14,445
Accounts Receivable	15,372
Prepaid Insurance	3,904
Total Current Assets		$33,721
Property, Plant and Equipment:-
Land	$74,664
Buildings	129,076
Less:- Accumulated Depreciation, Buildings	(55,632)
Equipment	100,528
Less:- Accumulated Depreciation, Equipment	(22,838)
Total Property, Plant and Equipment		$225,798
Total Assets		$259,519
Liabilities and Stockholders Equity:-
Liabilities:-
Current Liabilities:-
Accounts Payable	$11,590
Interest Payable	4,392
Notes Payable (due in 2023)	16,592
Total Current Liabilities		$32,574
Long-term Liabilities:-
Notes Payable	$97,600
Total Long-term Liabilities		$97,600
Stockholders Equity:-
Common Stock	$73,200
Retained Earnings (December 31,2022)	56,145
Total Stockholders Equity		$129,345
Total Liabilities and Stockholders Equity		$259,519

Note:-

$16,592 of the Notes Payable Will be paid in 2023,so this amount of Notes Payable treated as Current Liabilities and Remaining Amount of $97,600 ($114,192-$16,592) treated as Long-term Liabilities.