Prepare the classified balance sheet in report form as of
DecemberDecember
3131,
20182018.
Every balance sheet is prepared in a similar manner.
bullet• Each asset account is listed separately and then totaled. Cash is typically always listed first.
bullet• Liabilities are listed separately and then totaled. Liabilities that are to be paid first are listed first.
bullet• The retained earnings balance is taken directly from the statement of retained earnings.
bullet• The balance sheet must always balance. Assets = Liabilities + Stockholders' Equity
In a classified balance sheet, assets are shown in order of liquidity and liabilities are classified by the
order in which they must be paid, either current (within one year) or long-term (more than one year).
Liquidity measures how quickly and easily an account can be converted to cash (because cash is the most
liquid asset). Accounts Receivable are relatively liquid because receivables are collected quickly. Office
Supplies are less liquid, and Buildings and Furniture are even less so because they take longer to convert
to cash or to be used up.
We are asked to prepare our classified balance sheet in report
form.
Report form lists the assets at the top and liabilities and stockholders' equity below. A balance sheet that
lists the assets on the left and the liabilities and the equity on the right is an arrangement known as the
account
form.
Although either form is acceptable, the report form is more popular.
Begin with the assets section of the statement and start by selecting the labels, accounts, and subtotals
to be reported on the classified balance sheet. Remember that current assets are those that will be
converted to cash, sold, or used up during the next 12 months, or within the business's operating cycle if
the cycle is longer than a year. Cash, Accounts Receivable, Office Supplies, and Prepaid Insurance are
examples of current assets. Long-term assets are all the assets that will not be converted to cash or used
up within the business's operating cycle or one year, whichever is greater. Long-term assets are typically
made up of three categories: long-term investments; property, plant, and equipment; and intangible
assets. Go ahead and select the labels of the asset portion of the classified balance sheet.
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Wonder's Quality Automotive
Balance Sheet
December 31, 2018
Assets
Current Assets:
Cash
Accounts Receivable
Office Supplies
Prepaid Insurance
Total Current Assets
Property, Plant, and Equipment:
Equipment
Less:
Acc. Depr.—Equipment
Land
Total Property, Plant, and Equipment
Total Assets
Enter each asset account's balance and calculate the necessary subtotal and total amounts to complete
the asset portion of the classified balance sheet.
LOADING...
(Click
the icon to view the Balance Sheet columns of the worksheet completed in Requirement 5.)
Save Accounting Table... +
Copy to Clipboard...
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Wonder's Quality Automotive
Balance Sheet
December 31, 2018
Assets
