Question

Fruity Farms was incorporated as a private company on January 1, 2017. The company’s accounts included the following at January 31, 2017:

Accounts Payable	$	20,000	Land	$	100,000
Building		50,000	Notes Payable, due 2019		22,000
Bank Overdraft		9,000	Retained Earnings		74,000
Contributed Capital		75,000	Supplies		3,000
Equipment		47,000

During the month of February, the company had the following activities:

1. Paid a dividend to shareholders of $15,000.
2. Repaid $10,000 cash to a local bank.
3. Issued 500 shares for $50,000 cash.
4. Purchased equipment for $30,000, paying $3,000 in cash and signing a note due in six months for the balance.
5. Purchased supplies for $3,000 on account.

4. Prepare a classified balance sheet at February 28,2017

FRUITY FARMS Balance Sheet At February 28, 2017 Assets Liabilities Current assets Current liabilities Cash Accounts payable Supplies Note payable (short-term) Total current assets 0 Total current liabilities 0 Buildings Note payable (long-term) Land Equipment Total liabilities 0 Shareholders’ equity Contributed capital Retained earnings Total shareholders’ equity 0 Total assets $0 Total liabilities & shareholders’ equity $0

Answer 1

FRUITY FARMS
Balance Sheet
At February 28, 2017
Assets		Liabilities
Current assets		Current liabilities
Cash(-9000-15000+50000-3000)	23000	Accounts payable	23000
Supplies	6000	Note payable (short-term)	27000
Total current assets	29000	Total current liabilities	50000
Buildings	50000	Note payable (long-term) (22000	22000
Land	100000
Equipment(47000+30000)	77000	Total liabilities	72000
		Shareholders’ equity
		Contributed capital (75000+50000)	125000
		Retained earnings (74000-15000)	59000
		Total shareholders’ equity	184000
Total assets	$256,000	Total liabilities & shareholders’ equity	$256,000