Question

Exercise 3-9 (Algo) Balance sheet preparation [LO3-2, 3-3]

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	$	135,000
Accounts receivable		270,000
Inventory		220,000
Furniture and fixtures (net)		155,000
Total assets	$	780,000
Liabilities and Shareholders’ Equity
Accounts payable (for merchandise)	$	220,000
Notes payable		230,000
Interest payable		11,500
Common stock		120,000
Retained earnings		198,500
Total liabilities and shareholders’ equity	$	780,000

Transactions during 2021 (current year) were as follows:

1.	Sales to customers on account	$	880,000
2.	Cash collected from customers		860,000
3.	Purchase of merchandise on account		570,000
4.	Cash payment to suppliers		580,000
5.	Cost of merchandise sold		520,000
6.	Cash paid for operating expenses		240,000
7.	Cash paid for interest on notes		23,000

Additional Information:

The notes payable are dated June 30, 2020, and are due on June 30, 2022. Interest at 10% is payable annually on June 30. Depreciation on the furniture and fixtures for 2021 is $28,000. The furniture and fixtures originally cost $380,000.

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. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1