Question

In: Accounting

The following accounts were extracted from Salem Company by end of the year: Accounts payable Accounts...

The following accounts were extracted from Salem Company by end of the year:

Accounts payable

Accounts receivable

Accumulated depreciation- Building

Accumulated depreciation-equipment

Bonds payable

Buildings

Cash

Copyright

Equipment

Inventory

Investment (long term

Investment in six-month securities

Capital

Land

Prepaid rennet

Revenue received in advance

Required:

List the main items of the classified financial position.
Prepare the balance sheet format out of the above accounts.

Expert Solution

Main items are as below:

Assets: It includes current assets, long-term investments, fixed assets, and intangible assets.

Liabilities: It includes current liabilities and long-term liabilities.

Equity: It includes capital.

An equation must be satisfied then, Assets = Liabilities + Equity

Balance sheet

(Classified)

Assets:
Current assets:
Cash		$XXX
Accounts receivable		$XXX
Investment short-term (6 months)		$XXX
Inventory		$XXX
Prepaid rent		$XXX
Total current assets		$XXX

Long-term investment		$XXX

Fixed assets:
Buildings	$XXX
Accumulated depreciation	($XXX)
Book value of buildings		$XXX
Equipment	$XXX
Accumulated depreciation	($XXX)
Book value of equipment		$XXX

Intangible assets:
Copyright		$XXX

Total assets		$XXX

Liabilities:
Current liabilities:
Accounts payable		$XXX
Revenue received in advance		$XXX
Total current liabilities		$XXX

Long-term liabilities:
Bonds payable		$XXX

Total liabilities		$XXX

Owners’ equity:
Capital		$XXX

Total liabilities and owners’ equity		$XXX

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