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Chapter 1: Q33E_2 (page 41)

Preparing the balance sheet

Requirements

1. Prepare the balance sheet for Wilson Towing Service as of June 30, 2018.

2. What does the balance sheet report?

Short Answer

Expert verified

Wilson Towing Service

Balance Sheet

December 31, 2018
Assets
Liabilities

Cash

$1,400

Accounts Payable

$8,000

Office Supplies

1,000

Notes Payable

6,800

Accounts Receivable

9,000

Total Liabilities

14,800

Equipment

25,850

Stockholders’ Equity

Common Stock

11,000

Retained Earnings

11,450

Total Stockholders’ Equity

22,450

Total Assets

$37,250

Total Liabilities and Stockholders’ Equity

$37,250

Step by step solution

01

Explanation of Balance Sheet

The Balance sheet indicates the balances of assets, liabilities, and owners’ equity on a particular date or at the end of an accounting period.

02

Details of balance sheet

In the balance sheet, total assets are $37,250, total liabilities are $14,800, and total stockholders’ equity is $22,450.

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Most popular questions from this chapter

Preparing the balance sheet Requirements 1. Prepare the balance sheet for Wilson Towing Service as of June 30, 2018. 2. What does the balance sheet report?

Prepare the statement of retained earnings for Damon Design Studio for the year ending December 31, 2018.

Amos Sharp recently opened his own accounting firm on October 1, which he operates as a corporation. The name of the new entity is Amos Sharp, CPA. Sharp experienced the following events during the organizing phase of the new business and its first month of operations in 2018. Oct. 5 Sharp deposited \(45,000 in a new business bank account titled Amos Sharp, CPA. The business issued common stock to Sharp. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(6,500. 10 Consulted with tax client and received \)3,300 for services rendered. 11 Paid utilities, \(340. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)16,000. 18 Paid office rent, \(1,800. 25 Received amount due from client that was billed on October 12. 27 Paid full amount of Accounts Payable created on October 7. 31 Cash dividends of \)3,800 were paid to stockholders. Requirements 1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet.

Explain the role of the International Accounting Standards Board (IASB) in relation to International Financial Reporting Standards (IFRS).

Let’s examine a case using Greg’s Tunes and Sal’s Silly Songs. It is now the end of the first year of operations, and the stockholders want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and no dividends were paid. The businesses throw together the data shown on the next page at year-end: \( 23,000 8,000 35,000 22,000 \) 10,000 6,000 44,000 9,000 Total Assets Common Stock Total Revenues Total Expenses Greg’s Tunes: Sal’s Silly Songs: Total Liabilities Common Stock Total Expenses Net Income To gain information for evaluating the businesses, the stockholders ask you several questions. For each answer, you must show your work to convince the stockholders that you know what you are talking about.

Requirements; 6. Which of the foregoing questions do you think is most important for evaluating these two businesses? Why?

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