Preparing a Balance Sheet—A Second Problem
The following list of balance sheet items are in random order for Wilson Farms, Inc., at September 30, 2011:
Land | $490,000 | Fences and Gates | $33,570 |
Barns and Sheds | 78,300 | Irrigation System | 20,125 |
Notes Payable | 330,000 | Cash | 16,710 |
Accounts Receivable | 22,365 | Livestock | 120,780 |
Citrus Trees | 76,650 | Farm Machinery | 42,970 |
Accounts Payable | 77,095 | Retained Earnings | ? |
Property Taxes Payable | 9,135 | Wages Payable | 5,820 |
Capital Stock | 290,000 |
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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 Exhibit 2–10. (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 $13,700 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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