Question

The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year). KORVER SUPPLY COMPANY Balance Sheet At December 31, 2020 Assets Cash $120,000 Accounts receivable 300,000 Inventory 200,000 Furniture and fixtures (net)  150,000 Total assets $770,000 Liabilities and Shareholders’ Equity Accounts payable (for merchandise) $190,000 Notes payable 200,000 Interest payable 6,000 Common stock 100,000 Retained earnings  274,000 Total liabilities and shareholders’ equity $770,000 Transactions during 2021 (current year) were as follows: 1. Sales to customers on account $800,000 2. Cash collected from customers 780,000 3. Purchase of merchandise on account 550,000 4. Cash payment to suppliers 560,000 5. Cost of merchandise sold 500,000 6. Cash paid for operating expenses 160,000 7. Cash paid for interest on notes 12,000 Additional Information: The notes payable are dated June 30, 2020, and are due on June 30, 2022. Interest at 6% is payable annually on June 30. Depreciation on the furniture and fixtures for 2021 is $20,000. The furniture and fixtures originally cost $300,000.

Required: Prepare a classified balance sheet at December 31, 2021, by updating ending balances from 2020 for transactions during 2021 and the additional information. The cost of furniture and fixtures and their accumulated depreciation are shown separately.

Answer 1