Final answer:
A balance sheet is a financial statement that shows a company's assets, liabilities, and equity. Red Boat Co.'s balance sheet shows current and long-term assets and liabilities. The company's total assets are $44,650, while the total liabilities and equity are $44,650.
Step-by-step explanation:
A balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time. In this case, we need to prepare Red Boat Co.'s balance sheet, distinguishing between current and long-term assets and liabilities.
Assets are what a company owns, and liabilities are what it owes. Current assets are those that can be converted into cash within one year, while long-term assets are those that will last more than one year. Current liabilities are debts that must be paid within one year, while long-term liabilities are debts that will be paid off over a longer period of time.
Based on the given information, the balance sheet for Red Boat Co. would be as follows:
- Current Assets:
- Cash: $1,300
- Prepaid Expenses: $3,150
- Accounts Receivable: $2,750
- Inventory: $5,500
- Long-Term Assets:
- Machinery: $7,450
- Land: $11,500
- Building: $13,000
- Total Assets: $44,650
- Current Liabilities:
- Accounts Payable: $5,950
- Accrued Expenses: $7,450
- Long-Term Liabilities:
- Total Liabilities: $36,900
- Equity:
- Retained Earnings: $5,750
- Common Stock: $3,000
- Total Equity: $8,750
- Total Liabilities and Equity: $44,650