Balance Sheet Preparation with a Missing Element The following data are availabl
ID: 2507285 • Letter: B
Question
Balance Sheet Preparation with a Missing Element
The following data are available for Schubert Products Inc. as of December 31, 2012.
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,500
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 24,000
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 20,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,500
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . ?
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Required:
1. Prepare a balance sheet for Schubert Products Inc.
2. Determine the amount of retained earnings at December 31, 2012.
3. Interpretive Question: In what way is a balance sheet a depiction of the basic accounting
equation?
Explanation / Answer
1. Balance Sheet Preparation with a Missing Element Schubert Products Inc. Balance Sheet December 31, 2009
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,500
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 24,000
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 20,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,500
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . ?
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Assets Cash ............................................................................... 7,500
Accounts receivable ..................................................... 20,000
Supplies .........................................................................2,000
Building ........................................................................49,500
. Land ............................................................................... 20,000
Total assets ..............................................................99,000
Liabilities and Owners' Equity Liabilities:
Accounts payable ....................................................24,000
Owners' equity: Capital stock ...........................................................42,000
. Retained earnings ..................................................33,000 .
Total liabilities and owners' equity..............................$99,000
Assets Liabilities = Owners' equity Capital stock =
Retained earnings $99,000- $24,000 = $75,000- $42,000 = $33,000
The balance sheet is a depiction of the accounting equation because it shows total assets being equal to total liabilities and owners' equity. Thus, A = L + OE, as shown on each balance sheet.
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