The following is a December 31, 2013, post-closing trial balance for the Vosburg

Question

The following is a December 31, 2013, post-closing trial balance for the Vosburgh Electronics Corporation.

Account Title

Cash 95,000 (Debit)

Short-term investments 210,000 (Debit)

Accounts receivable 151,000 (Debit)

Long-term investments 49,000 (Debit)

Inventories 229,000 (Debit)

Loans to employees 54,000 (Debit)

Prepaid expenses (for 2014) 30,000 (Debit)

Land 294,000 (Debit)

Building 1,690,000 (Debit)

Machinery and equipment 651,000 (Debit)

Patent 166,000 Franchise 54,000 (Debit)

Note receivable 320,000 (Debit)

Interest receivable 26,000 (Debit)

Accumulated depreciation%u2014building 634,000 (Credit)

Accumulated depreciation%u2014equipment 224,000 (Credit)

Accounts payable 203,000 (Credit)

Dividends payable (payable on 1/16/14) 24,000 (Credit)

Interest payable 30,000 (Credit)

Taxes payable 54,000(Credit)

Unearned revenue 74,000 (Credit)

Notes payable 328,000 (Credit)

Allowance for uncollectible accounts 22,000 (Credit)

Common stock 2,056,000 (Credit)

Retained earnings 370,000(Credit)

Totals 4,019,000 (Debits) 4,019,000 (Credits)

Additional information:

1. The common stock represents 1.1 million shares of no par stock authorized, 640,000 shares issued and outstanding.

2. The loans to employees are due on June 30, 2014.

3. The note receivable is due in installments of $64,000, payable on each September 30. Interest is payable annually.

4. Short-term investments consist of marketable equity securities that the company plans to sell in 2014 and $64,000 in treasury bills purchased on December 15 of the current year that mature on February 15, 2014. Long-term investments consist of marketable equity securities that the company does not plan to sell in the next year.

5. Unearned revenue represents customer payments for extended service contracts. 75 percent of these contracts expire in 2014, the remainder in 2015.

6. Notes payable consists of two notes, one for $114,000 due on January 15, 2015, and another for $214,000 due on June 30, 2016.

Required: 1. Prepare a classified balance sheet for Vosburgh at December 31, 2013.

Explanation / Answer

The balance sheet shows the health of a business from the day the business started operations to the specific date of the balance sheet report. The balance sheet has three sections: assets, liabilities, and equity. Following is a thumbnail sketch of the three: Assets: Resources a company owns, such as cash, equipment, and buildings Liabilities: Debt the business incurs for operating and expansion purposes Equity: Amount of ownership left in the business after deducting total liabilities from total assets Standing on their own, they contain valuable information about a company. However, a user has to see all three interacting together on the balance sheet to form an opinion approaching reliability about the company. A classified balance sheet groups like accounts together. For example, all current assets, such as cash and accounts receivable, show up in one grouping. Likewise, all current liabilities, such as accounts payable and other short-term debt, show up in another grouping. This structure assists users of the balance sheet so they don

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