Problem

Shown below in random order is a list of balance sheet items for Apple Valley Farms at Sep...

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

 

 

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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