Question

Exercise 2-05

These items are taken from the financial statements of Oriole Company at December 31, 2022.

Buildings		$116,380
Accounts receivable		13,860
Prepaid insurance		3,520
Cash		13,024
Equipment		90,640
Land		67,320
Insurance expense		858
Depreciation expense		5,830
Interest expense		2,860
Common stock		66,000
Retained earnings (January 1, 2022)		44,000
Accumulated depreciation—buildings		50,160
Accounts payable		10,450
Notes payable		102,960
Accumulated depreciation—equipment		20,592
Interest payable		3,960
Service revenue		16,170

Prepare a classified balance sheet. Assume that $14,960 of the note payable will be paid in 2023. (List Current Assets in order of liquidity and Property, Plant and Equipment in order of Land, Buildings and Equipment.)

Answer 1

Income statement

Service revenue		16,170
Expenses :
Insurance expense	858
Depreciation expense	5,830
Interest expenses	2,860
Total expenses		9,548
Net income		$6,622

Statement of retianed earnings

retained earning, beginning	44,000
Add : Net income	6,622
Retained earning, ending	$50,622

Balance Sheet
Assets
Current Assets:
Cash		13,024
Accounts receivable		13,860
Prepaid insurance		3,520
Total Current Assets			30,404
Plant,Assets :
Land		67,320
Building	116,380
Less : Accumulated Depreciation - building	-50,160	66,220
Equipment	90,640
Less : Accumulated Depreciation - equipment	-20,592	70,048
Total plant assets			203,588
Total Assets			233,992
Liabilities and Stockholders Equity
Current Liabilities:
Accounts payable		10,450
Note payable		14,960
Interest payable		3,960
Total Current liabilities			29,370
Long Term Liabilities:
note payable			88,000
Total liabilities			117,370
Stockholders Equity:
Retained earnings		50,622
Common stock		66,000
Total Stockholders Equity:			116,622
Total Liabilities & Stockholders Equity			233,992