Preparing a Balance Sheet and Analyzing Some of Its Parts (AP5-1)
Exquisite Jewelers is developing its annual financial statements for 2012. The following amounts were correct at December 31. 2012: cash. $58.000: accounts receivable, $71.000: merchandise inventory. $154.000: prepaid insurance. $1.500: investment in stock of Z corporation (long-term). $36.000: store equipment, $67.000: used store equipment held for disposal, $9.000; accumulated depreciation, store equipment. $19.000; accounts payable. $52.500: long-term note payable, $42.000: income taxes payable. $9.000: retained earnings. $164.000: and common stock, 100.000 shares outstanding, par value $1.00 per share (originally sold and issued at $1.10 per share).
Required:
1. Based on these data, prepare a December 31, 2012 balance sheet. Use the following major captions (list the individual items under these captions):
a. Assets: Current Assets. Long-Term Investments. Fixed Assets, and Other Assets.
b. Liabilities: Current Liabilities and Long-Term Liabilities.
c. Stockholders' Equity: Contributed Capital and Retained Earnings.
2. What is the net book value of the store equipment? Explain what this value means.
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