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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Balance Sheet The following beginning balance sheet and statement of cash flows for 2019 are available for Fazzi Company:

Chapter 21, Problem 4E, Balance Sheet The following beginning balance sheet and statement of cash flows for 2019 are

Required:

Next Level On the basis of this information, prepare a balance sheet for Fazzi as of December 31, 2019.

To determine

Prepare balance sheet of F Company as on December 31, 2019.

Explanation

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

Prepare the balance sheet as on January 1, 2019:

Working Note 1:

Calculate the amount of accounts Receivable in the balance sheet of F Company:

 Accounts receivable=(Beginning year of accounts receivable +increase in accounts receivable)=$2,300+$700=$3,000

Working Note 2:

Calculate the amount of land in the balance sheet of F Company:

 Land= (Sale of land  Proceeds from sale of land+Gain on sale of land)=$4,900$1,200+$200=$3,900

Working Note 3:

Calculate the amount of equipment in the balance sheet of F Company:

Equipment=(Sale of equipment +purchase of equipment)=$20,000+$5,000=$25,000

Working Note 4:

Calculate the amount of depreciation in the balance sheet of F Company:

Depreciation=(Accumulated depreciationDepreciation expenses)=$10,900$900=$10,000

Working Note 5:

Calculate the amount of accounts payable in the balance

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