Items Taken From The Financial Statements
The Following Items Are Taken From the Financial Statements Of Laramie
The following items are taken from the financial statements of Laramie Company for the year ending December 31, 2010: Accounts payable $20,000; Interest Payable $8,000; Accounts receivable $21,000; Accumulated depreciation – equipment $28,000; Advertising expense $21,000; Cash $5,000; Laramie, Capital (1/1/2010) $0; Laramie, Drawing $12,000; Depreciation expense $12,000; Insurance expense $3,000; Note payable, due 6/30/15 $60,000; Prepaid insurance (12-month policy) $6,000; Rent expense $17,000; Salaries expense $32,000; Service revenue $130,000; Interest income $3,000; Supplies $9,000; Supplies expense $6,000; Land $45,000; Equipment $155,000. All accounts have normal balances. All asset, liability, revenue, and expense accounts are post-adjusting entry balances. Closing entries for 2010 are not reflected in the account balances, so you need to update the Capital Account. Instructions: Prepare a classified Balance Sheet for the Laramie Company for the year ending December 31, 2010. Include subtotals for classifications and totals for balance sheet sections. There were no additional owner investments during 2010.
Paper For Above instruction
Classified Balance Sheet for Laramie Company – December 31, 2010
Introduction
A classified balance sheet organizes a company's assets, liabilities, and equity into meaningful categories to provide clearer insights into its financial position. This presentation reflects the financial status of Laramie Company as of December 31, 2010, incorporating all necessary adjustments and closing entries, particularly updating the owner’s capital account to reflect net income and withdrawals for the year.
Assets
Current Assets
- Cash: $5,000
- Accounts receivable: $21,000
- Prepaid insurance: $6,000
- Supplies: $9,000
Total Current Assets: $41,000
Property, Plant, and Equipment
- Land: $45,000
- Equipment: $155,000
- Accumulated depreciation – equipment: -$28,000
Total Property, Plant, and Equipment: $172,000
Total Assets
Assets Total: $213,000
Liabilities
Current Liabilities
- Accounts payable: $20,000
- Interest payable: $8,000
Total Current Liabilities: $28,000
Long-term Liabilities
- Note payable (due 6/30/15): $60,000
Total Long-term Liabilities: $60,000
Total Liabilities
Liabilities Total: $88,000
Owner's Equity
Calculations
To determine owner’s equity, we need to compute the net income for 2010 and the ending capital balance. Since there were no owner investments during the year, the ending capital equals the beginning capital plus net income minus withdrawals. Given that the beginning capital was $0 (assuming from the data), and withdrawals of $12,000 occurred, we first calculate net income.
Income Statement Summary
- Service revenue: $130,000
- Interest income: $3,000
- Total Revenues: $133,000
- Expenses:
- Advertising expense: $21,000
- Depreciation expense: $12,000
- Insurance expense: $3,000
- Rent expense: $17,000
- Salaries expense: $32,000
- Supplies expense: $6,000
- Total Expenses: $91,000
Net Income Calculation
Total revenues ($133,000) minus total expenses ($91,000) results in net income of $42,000 for 2010.
Owner’s Capital Calculation
Beginning capital + net income - withdrawals = ending capital. Since beginning capital is not provided, we assume the initial owner’s capital balance is $0, adjusted through the period.
Thus, ending Capital = $0 + $42,000 - $12,000 = $30,000.
Statement of Owner’s Equity
- Beginning Capital, 1/1/2010: $0
- Net Income for 2010: $42,000
- Less: Owner’s Drawings: $12,000
- Ending Capital, 12/31/2010: $30,000
Owner’s Equity Section
- Owner’s Equity: $30,000
Total Liabilities and Owner's Equity
Total liabilities ($88,000) plus owner’s equity ($30,000) equals total to match total assets: $118,000.
Balance Sheet as of December 31, 2010
| Assets | Amount | Liabilities and Owner's Equity | Amount |
|---|---|---|---|
| Current Assets | Current Liabilities | ||
| Cash | $5,000 | Accounts payable | $20,000 |
| Accounts receivable | $21,000 | Interest payable | $8,000 |
| Prepaid insurance | $6,000 | ||
| Supplies | $9,000 | Total Current Liabilities | $28,000 |
| Total Current Assets | $41,000 | Long-term Liabilities | $60,000 |
| Property, Plant, & Equipment | |||
| Land | $45,000 | ||
| Equipment | $155,000 | ||
| Less: Accumulated Depreciation | -$28,000 | ||
| Total Property, Plant, & Equipment | $172,000 | ||
| Total Assets | $213,000 | ||
| Owner’s Equity | $30,000 | ||
| Total Liabilities and Owner’s Equity | $118,000 |
Note: The discrepancy between total assets ($213,000) and total liabilities plus owner’s equity ($118,000) suggests re-evaluation of property values, accumulated depreciation, and proper capitalization. The above simplified balance sheet assumes initial owner’s capital was zero and net income increased owner’s equity accordingly, with adjustments for withdrawals.
References
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- Wikipedia contributors. (2023). Classified Balance Sheet. In Wikipedia. https://en.wikipedia.org/wiki/Classified_balance_sheet