Question

The following is the ending balances of accounts at December 31, 2021, for the Welsmuller Publishing Company. Credits $ Debits 95, eee 190,eee 380,eee 178,000 350, eee $ 125,eee 178, eee Account Title Cash Accounts receivable Inventory Prepaid expenses Equipment Accumulated depreciation Investments Accounts payable Interest payable Deferred revenue Income taxes payable Notes payable Allowance for uncollectible accounts Connon stock Retained earnings Totals 75,000 35, eee 95, eee 45, eee 275, eee 31, eee 415,000 187,eee $1,283,000 $1,283,00 Additional information: 1. Prepaid expenses include $150,000 paid on December 31, 2021, for a two-year lease on the building that houses both the administrative offices and the manufacturing facility. 2. Investments include $45.000 in Treasury bilis purchased on November 30, 2021. The bills mature on January 30, 2022 The remaining $125,000 is an investment in equity securities that the company intends to sell in the next year. 3. Deferred revenue represents customer prepayments for magazine subscriptions. Subscriptions are for periods of one year or less. 4. The notes payable account consists of the following: a. a $55,000 note due in six months. b. a $136.000 note due in six years. c. a $84.000 note due in three annual installments of $28.000 each with the next Installment due August 31, 2022 5. The common stock account represents 415.000 shares of no par value common stock issued and outstanding. The corporation has 830,000 shares authorized. Required: Prepare a classified balanced sheet for the Welsmuller Publishing Company at December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

WELSMULLER PUBLISHING COMPANY,
Balance Sheet
at December 31,2021
ASSETS
Current Assets
Cash		95,000
Investment in Equity Securities		125,000
Accounts Receivable	190,000
Less:Allowance for uncollectible accounts	-31,000
Net Accounts Receivable		159,000
Inventory		300,000
Prepaid Expenses		103,000
Treasury Bills		45,000
Total Current Assets		827,000
Property ,Plant & Equipment
Equipment	350,000
Accumulated Depreciation	-125,000
Net Property,Plant & Equipment		225,000
Other Assets
Prepaid Expenses		75,000
Total Assets		1,127,000
Liabilities and Shareholder's Equity
Current Liabilities
Accounts Payable		75,000
Interest Payable		35,000
Deferred Revenue		95,000
Income Taxes Payable		45,000
Notes Payable		83,000
Total Current Liabilities		333,000
Long-Term Liabilities
Notes Payable		192,000
Total Liabilities		525,000
Shareholder's Equity
Common Stock	415,000
Retained Earnings	187,000
Total Shareholder's Equity		602,000
Total Liabilities and Shareholder's Equity		1,127,000

Workings:

1) Prepaid Expenses

Total Prepaid Expenses $178,000

Less:Long term portion ($150,000/2) $75,000

Current Portion $103,000

2) Investments are current liabilities as they will be realized next year

3) Deferred Revenue is current liabilities as it is for less than one year.

4) Notes Payable (Current Liabilities)

Due in Six months $55,000

Installment due in 2022 $28,000

Notes Payable(current liabilities) $83,000

5) Long-term Notes Payable

Total Notes Payable $275,000

Less: Current Notes Payable ($83,000)

Long Term Notes Payable $192,000

(NOTE: Investments can also be shown as full amount in Short Term investments.)