Question 11 E - Intermediate Accounting (Kieso)

Question

E5-11 (L03) EXCEL (Balance Sheet Preparation) Presented below is the adjusted trial balance of Kelly Corporation at December 31, 2017.

Particular	Debit	Credit
Cash	\(?
Supplies	1,200
Prepaid insurance	1,000
Equipment	48,000
Accumulated depreciation – Equipment		\)4,000
Trademarks	950
Accounts payable		10,000
Salaries and wages payable		500
Unearned service revenue		2,000
Bonds payable (due 2024)		9,000
Common stock		10,000
Retained earnings		25,000
Service revenue		10,000
Salaries and wages expenses	9,000
Insurance expenses	1,400
Rent expenses	1,200
Interest expenses	900
Total	\(?	\)?

 

Additional information: 

1. Net loss for the year was $2,500.

 2. No dividends were declared during 2017.

Instructions 

Prepare a classified balance sheet as of December 31, 2017.

Step-by-Step Solution

Answer

The balance sheet of the company totals $54,000.

Definition of Common Stock

The cluster of the securities issued by the business entity that provide voting rights to its holder is known as common stock. It is given to fulfill the capital requirement of the business entity.

Classified Balance Sheet

Particular	Amount $	Amount $
Assets
Current Assets
Cash (54,000 – 47,150)		$6,850
Supplies		1,200
Prepaid Insurance		1,000
Property, Plant, and equipment
Equipment	48,000
Less: Accumulated depreciation – equipment	(4,000)	44,000
Intangible assets
Trademarks		950
Total assets		54,000
Liabilities
Current liabilities
Account payable		10,000
Salaries and Wages payable		500
Unearned service revenue		2,000
Non-current liabilities
Bond payable		9,000
Total liabilities		21,500
Stockholders’ equity
Common stock		10,000
Reserves and surplus
Retained earnings (25,000 – 2,500)		22,500
Total liabilities and equity		$54,000