Question

The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation.

Account Title	Debits		Credits
Cash	32,000
Accounts receivable	70,000
Inventories	95,000
Interest payable			17,000
Marketable securities	58,000
Land	134,000
Buildings	335,000
Accumulated depreciation—buildings			107,000
Equipment	89,000
Accumulated depreciation—equipment			32,000
Copyright (net of amortization)	19,000
Prepaid expenses (next 12 months)	39,000
Accounts payable			72,000
Deferred revenues (next 12 months)			27,000
Notes payable			285,000
Allowance for uncollectible accounts			7,000
Common stock			270,000
Retained earnings			54,000
Totals	871,000		871,000

Additional information:

The $134,000 balance in the land account consists of $107,000 for the cost of land where the plant and office buildings are located. The remaining $27,000 represents the cost of land being held for speculation.

The $58,000 in the marketable securities account represents an investment in the common stock of another corporation. Valley intends to sell one-half of the stock within the next year.

The notes payable account consists of a $114,000 note due in six months and a $171,000 note due in three annual installments of $57,000 each, with the first payment due in August of 2019.

Required: Prepare a classified balance sheet for the Valley Pump Corporation at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Classified Balance Sheet - A Classified balance sheet represents a classified view of an entity's assets, liabilities, shareholders' equity into sub categories like Current assets, Fixed assets, Investments - short term and long term, Current liabilities, Non current liabilities etc. This way, the information is more organized and easy to understand for a common man and it is easy to analyse with this kind of classified balance sheet.

PLease see below the classified -

Balance Sheet of Valley corporation

For the year ended December 31, 2018

NOte 1 - As given in the question regarding Marketable securities that half of the investments are to be sold in next year i.e. within 12 months from the day of balance sheet. hence these much of the investments (50% of 58,000 = 29,000) are classified as short term investment i.e. current assets and remaining are classified under Non current investments.

Note 2 - Same way, Notes payable which are payble within 12 months from the date of balance sheet are to be classified under Current liabilities and remaining will be coming under Non current liabilities. Hence, 114,000 + 57000 = 171,000 are Current liabilities as these are payable within 12 months.