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Preparing a Balance Sheet, Computing Net Income, and Understanding Equity Transactions

At the beginning of 2015, Barth Company reported the following balance sheet:

| **Assets** | **Liabilities** |
|----------------------|---------------------------|
| Cash $3,600 | Accounts Payable $9,000 |
| Accounts Receivable $11,025 | |
| Equipment $7,500 | |
| Land $37,500 | |
| **Total Assets $59,625** | **Total Liabilities and Equity $59,625** |

| **Equity** |
|----------------------|
| Common Stock $35,625 |
| Retained Earnings $15,000 |

**Total Liabilities and Equity $59,625**

**Required:**

a. At the end of 2015, Barth Company reported the following assets and liabilities:
- Cash: $6,600
- Accounts Receivable: $13,800
- Equipment: $6,750
- Land: $37,500
- Accounts Payable: $5,625

Prepare a year-end balance sheet for Barth. (Hint: Report equity as a single total.)

Answer :

Final answer:

To prepare the year-end balance sheet for Barth Company, update the values of assets and liabilities based on the provided information. The year-end balance sheet shows the updated values of each category, including assets, liabilities, and equity.

Explanation:

To prepare the year-end balance sheet for Barth Company, you need to update the values of the assets and liabilities based on the information provided. The new values are as follows: Cash $6,600, Accounts Receivable $13,800, Equipment $6,750, Land $37,500, and Accounts Payable $5,625. To compute the equity, subtract the total liabilities (Accounts Payable) from the total assets. In this case, Equity is $6,600 + $13,800 + $6,750 + $37,500 - $5,625 = $59,025.

The year-end balance sheet for Barth Company is as follows:

  • Assets:
    1. Cash - $6,600
    2. Accounts Receivable - $13,800
    3. Equipment - $6,750
    4. Land - $37,500
  • Liabilities:
    1. Accounts Payable - $5,625
  • Equity - $59,025

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