Preparing and Evaluating a Balance Sheet
Listed below in random order are the items to be included in the balance sheet of Rocky Mountain Lodge at December 31, 2015:
Equipment | $ 39,200 | Buildings | $500,000 |
Land | 425,000 | Capital Stock | 135,000 |
Accounts Payable | 54,800 | Cash | 31,400 |
Accounts Receivable | 10,600 | Furnishings | 58,700 |
Salaries Payable | 33,500 | Snowmobiles | 15,400 |
Interest Payable | 12,000 | Notes Payable | 620,000 |
|
| Retained Earnings | ? |
Instructions
a. Prepare a balance sheet at December 31, 2015. Include a proper heading and organize your balance sheet similar to Exhibit 2–9. You will need to compute the amount to be shown for Retained Earnings.
EXHIBIT 2–9
Balance Sheet, Jan. 31
Assets
Liabilities&Owners’ Equity
Cash
$ 18,000
Liabilities:
Accounts Receivable
1,200
Notes Payable
$ 30,000
Tools and Equipment
12,000
Accounts Payable
7,000
Building
36,000
Total liabilities
$ 37,000
Land
52,000
Owners’ equity:
Capital Stock
$ 80,000
Retained Earnings
2,200
$ 82,200
Total
$119,200
Total
$119,200
b. Assume that no payment is due on the notes payable until 2017. Does this balance sheet indicate that the company is in a strong financial position as of December 31, 2015? Explain briefly.
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