Preparing a Balance Sheet—A Second Problem
Shown below in random order is a list of balance sheet items for Maple Valley Farms at September 30, 2015:
Land | $ 50,000 | Fences and Gates | $14,100 |
Barns and Sheds | 19,100 | Irrigation System | 10,200 |
Notes Payable | 65,000 | Cash | 9,300 |
Accounts Receivable | 15,000 | Livestock | 5,000 |
Apple Trees | 84,000 | Farm Machinery | 20,000 |
Accounts Payable | 8,100 | Retained Earnings | ? |
Property Taxes Payable | 4,700 | Wages Payable | 1,200 |
Capital Stock | 100,000 |
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Instructions
a. Prepare a balance sheet by using these items and computing the amount for Retained Earnings. Use a sequence of assets similar to that illustrated in Chapter 2 of the text. Include a proper heading for your balance sheet.
b. Assume that on September 30, immediately after this balance sheet was prepared, a tornado completely destroyed one of the barns. This barn had a cost of $4,500 and was not insured against this type of disaster. Explain what changes would be required in your September 30 balance sheet to reflect the loss of this barn.
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