Shown below in random order is a list of balance sheet items for Apple Valley Farms at September 30,2007:
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. (After "Barns and Sheds." you may list the remaining assets in any order.) 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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