Preparing a Balance Sheet – A Second Problem
Shown below in random order is a list of balance sheet items for Fire Valley Farms at September 30, 2005:
| (Rs.) | (Rs.) | ||
| Land | 490,000 | Fences and Gates | 33,570 |
| Barns and Sheds | 78,300 | Irrigation System | 20,125 |
| Notes Payable | 330,000 | Cash | 16,710 |
| Accounts Receivable | 22,365 | Livestock | 120,780 |
| Citrus Trees | 76,650 | Farm Machinery | 42,970 |
| Accounts Payable | 77,095 | Retained Earnings | ? |
| Property Taxes Payable | 9,135 | Wages Payable | 5,820 |
| Capital Stock | 290,000 |
Instructions
- Prepare a balance sheet by using these items and computing the amount for retained earnings. Use a sequence of assets similar to that illustrated in Exhibit 2 10. (After “Barns and Sheds” you may list the remaining assets in any order.) Include a proper heading for your balance sheet.
- Assume that on September 30, immediately after this balance sheet was prepared, a tornado completely destroyed one of the barns. This barn had a cost of Rs. 13,700, and was not insured against this type of disaster. Explain what charges would be required in your September 30 balance sheet to reflect the loss of this barn.