The amounts for property, plant, and equipment presented in the balance sheet were reported net of accumulated depreciation (cost less accumulated depreciation).These amounts were $4,000 for cleaning equipment and $5,000 for delivery trucks as of January 1, 2011. Depreciation for 2011 was $2,000 for cleaning equipment and $5,000 for delivery trucks.
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WHITEGLOVES JANITORIAL SERVICE INC. Balance Sheet December 31, 2011 |
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Assets |
Liabilities and Stockholders’ Equity |
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Current assets |
Current liabilities |
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Cash |
$ 6,500 |
Notes payable |
$10,000 |
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Accounts receivable |
9,000 |
Accounts payable |
2,500 |
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Janitorial supplies |
5,200 |
Total current liabilities |
12,500 |
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Prepaid insurance |
4,800 |
Long term liability |
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Total current assets |
25,500 |
Notes payable |
15,000 |
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Property, plant, and equipment |
Total liabilities |
27,500 |
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Cleaning equipment (net) |
22,000 |
Stockholders’ equity |
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Delivery trucks (net) |
34,000 |
Common stock |
$ 40,000 |
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Total property, plant, and equipment |
56,000 |
Retained earnings |
14,000 |
54,000 |
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Total assets |
$81,500 |
Total liabilities and stockholders’ equity |
$81,500 |
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Instructions
With the class divided into groups, answer the following.
(a) Prepare a correct balance sheet.
(b) Were the terms of the bank loan met? Explain.