Question

The ledger accounts of the business at June 30, 2007, are listed here in alphabetical order:

Accounts Payable $ 26,100 Notes Payable $180,000
Accounts Receivable 7,450 Notes Receivable 9,500
Animals 189,060 Props and Equipment 89,580
Cages 24,630 Retained Earnings 27,230
Capital Stock 310,000 Salaries Payable 9,750
Cash ? Tents 63,000
Costumes 31,500 Trucks&Wagons 105,840
Instructions
a. Prepare a balance sheet by using these items and computing the amount of Cash at June 30. 2007. Organize your balance sheet similar to the one illustrated in Exhibit 2-10. (After "Ac­counts Receivable." you may list the remaining assets in any order. ) Include a proper balance sheet heading.
b. Assume that late in the evening of June 30, after your balance sheet had been prepared, a fire destroyed one of the tents, which had cost $14,300. The tent was not insured. Explain what changes would be required in your June 30 balance sheet to reflect the loss of this asset.

Answer 1

Balance Sheet

As of June 30, 2007

Assets

Cash $32,520

Accounts Receivable 7,450

Notes Receivable 9,500

Animals 189,060

Props and Equipment 89,580

Cages 24,630

Tents 63,000

Costumes 31,500

Trucks & Wagons 105,840

Total assets $553,080

Liabilities and Equity:

Accounts Payable $ 26,100

Notes Payable 180,000

Salaries Payable 9,750

Capital Stock 310,000

Retained Earnings 27,230

Total liabilities & equity $553,080

b. The required changes to the June 30 balance sheet to reflect the loss of this asset are:

1. Reduce Tents by $14,300 (Loss of Assets)

2. Reduce Retained Earnings by $14,300 (Loss of Assets)

Step-by-step explanation:

a) Data and Calculations:

Cash $32,520 (Total assets - other assets)

Accounts Receivable 7,450

Notes Receivable 9,500

Animals 189,060

Props and Equipment 89,580

Cages 24,630

Tents 63,000

Costumes 31,500

Trucks & Wagons 105,840

Accounts Payable $ 26,100

Notes Payable 180,000

Salaries Payable 9,750

Capital Stock 310,000

Retained Earnings 27,230