Question

The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company.

Account Title	Debits				Credits
Cash	$	69,000
Accounts receivable		164,000
Inventory		287,000
Prepaid expenses		152.000
Equipment		324,000
Accumulated depreciation				$	112,000
Investments		144,000
Accounts payable					62,000
Interest payable					22,000
Deferred revenue					82,000
Income taxes payable					32,000
Notes payable					210,000
Allowance for uncollectible accounts					18,000
Common stock					402,000
Retained earnings					200,000
Totals	$	1,140,000		$	1,140,000

Additional information:

 1. Prepaid expenses include $124,000 paid on December 31, 2021, for a two-year lease on the building that houses both the administrative offices and the manufacturing facility.

 2. Investments include $32,000 in Treasury bills purchased on November 30, 2021. The bills mature on January 30, 2022. The remaining $112,000 is an investment in equity securities that the company intends to sell in the next year.

 3. Deferred revenue represents customer prepayments for magazine subscriptions. Subscriptions are for periods of one year or less.

 4. The notes payable account consists of the following: 

   a. a $42,000 note due in six months. 

   b. a $102,000 note due in six years. 

   c. a $66,000 note due in three annual installments of $22,000 each, with the next installment due August 31, 2022.

 5. The common stock account represents 402,000 shares of no par value common stock issued and outstanding. The corporation has 804,000 shares authorized.

Required: Prepare a classified balanced sheet for the Welsmuller Publishing Company at December 31, 2021. 

Answer 1

Answer:

WEISMULLER PUBLISHING COMPANY
Balance Sheet
At December 31,2021
Assets
Current assets:
Cash and Cash equivalents		$69,000
Short-term Investments		$144,000
Accounts receivable	$164,000
Allowance for uncollectible accounts	($18,000)	$146,000
Inventory		$287,000
Prepaid expenses [152,000-62,000]		$90,000
Total current assets		$736,000
Property,plant,and Equipment:
Equipment	$324,000
Accumulated depreciation	($112,000)
Net property,plant and equipment		$212,000
Other assets:
Prepaid expenses [124,000 x 1/2]		$62,000
Total assets		$1,010,000
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable		$62,000
Interest payable		$22,000
Deferred revenue		$82,000
Income taxes payable		$32,000
Notes payable		$66,000
Total current liabilities		$264,000
Long-term liabilities:
Notes payable		$144,000
Total liabilities		$408,000
Stockholders' Equity:
Common stock	$402,000
Retained earnings	$200,000
Total stockholders' equity		$602,000
Total liabilities and stockholders' equity		$1,010,000

Explanations:

Prepaid expenses:
Total prepaid expenses	$152,000
(less): Long-term portion (124,000/2)	($62,000)
Current portion	$90,000

Total investments to be realized on next year. So, all investments are short-term

Deferred revenue is current liabilities because it is related for less than a year.

Current liabilities of notes payable:
Due in six months	$42,000
Installment due in 2022	$22,000
Total current liabilities of notes payable	$64,000
Long-term notes payable:
Total notes payable	$210,000
(Less): Current liabilities of notes payable	($64,000)
Total Long-term notes payable	$146,000