Question

Brock Morton Services Co.
Balance Sheet
For the Year Ended December 31, 2009
Assets Liabilities
Current assets: Current liabilities:
Cash $7,170 Accounts receivable $10,000
Accounts payable 7,500 Accum. dep.-building 12,525
Supplies 2,590 Accum. dep.-equipment 7,340
Prepaid insurance 800 Net income 11,500
Land 24,000
Total current assets $42,060 Total liabilities $41,365
Stockholders' Equity
Property, plant, and equipment: Wages payable $1,500
Building $43,700 Capital Stock 88,645
Equipment 29,250 Total stockholders' equity $90,145
Total property, plant,
and equipment 72,950
Total assets $131,510 Total liabilities and stockholders
' equity $131,510
Prepare a corrected balance sheet.

Answer 1

Answer:

Brock Morton Services Co.

Corrected Balance Sheet  as at December 31, 2009:

Assets:

Current Assets:

Cash                                    $7,170

Accounts receivable          10,000

Supplies                               2,590

Prepaid Insurance                  800                         $20,560

Non-Current Assets:

Land                                                         24,000

Property, Plant, & Equipment   72,950

Less: Depreciation                    19,865   53,085   $77,085

Total Assets                                                           $97,645

Liabilities + Equity:

Current Liabilities:

Accounts payable                 7,500

Wages Payable                     1,500                         $9,000

Equity:

Capital Stock                                                         $88,645

Total Liabilities + Equity                                      $97,645

Explanation:

A Balance shows the financial position of an entity by listing the assets (current and noncurrent) and the liabilities (current and noncurrent) plus the equity.

The assets are the financial resources owned by the entity funded through equity and liabilities.  The liabilities are the financial obligations which an entity owes requiring future financial resources to be transferred to the creditors.  The equity is the ownership right of the stockholders in the business.  It is made up of financial resources contributed by the owners of the business and what the business has generated as retained earnings over the years, which are due to the owners.