To prepare the Balance Sheet for Blank Space Inc. as of December 31, 2014, we need to organize the accounts into three categories:
Assets,
Liabilities, and
Owner's Equity.
Here is the step-by-step logic to solve this:
Step 1: Identify and Order the Assets
Assets are things the company owns. We must list them in order of
liquidity (how fast they can be turned into cash).
1.
Cash: $2,000 (Most liquid)
2.
Accounts Receivable: $3,000 (Money owed to the company)
3.
Supplies: $1,000
4.
Land: $50,000 (Fixed Asset)
5.
Building: $140,000 (Fixed Asset)
6.
Trucks: $35,000 (Fixed Asset)
7.
Equipment: $75,000 (Fixed Asset)
*Calculation for Total Assets:*
$2,000 + $3,000 + $1,000 + $50,000 + $140,000 + $35,000 + $75,000 =
$306,000
Step 2: Identify the Liabilities
Liabilities are debts or money the company owes to others.
1.
Accounts Payable: $25,000 (Usually listed first as it is a current liability)
2.
Bank Loan: $10,000
3.
Mortgage Payable: $75,000
*Calculation for Total Liabilities:*
$25,000 + $10,000 + $75,000 =
$110,000
Step 3: Calculate Owner's Equity
The problem asks us to use the Accounting Equation to find the missing equity amount. The owner is T. Swift.
*
Formula: Assets - Liabilities = Owner's Equity
*
Math: $306,000 (Total Assets) - $110,000 (Total Liabilities) =
$196,000
So,
T. Swift, Capital is $196,000.
Step 4: Verify the Balance Sheet
The bottom of the balance sheet must balance.
* Total Assets = $306,000
* Total Liabilities + Owner's Equity = $110,000 + $196,000 = $306,000
Since both sides equal $306,000, the balance sheet is correct.
Final Answer:
Blank Space Inc.
Balance Sheet
December 31, 2014
|
Assets | |
Liabilities | |
| :--- | :--- | :--- | :--- |
| Cash | $ 2,000 | Accounts Payable | $ 25,000 |
| Accounts Receivable | 3,000 | Bank Loan | 10,000 |
| Supplies | 1,000 | Mortgage Payable | 75,000 |
| Land | 50,000 |
Total Liabilities |
$ 110,000 |
| Building | 140,000 | | |
| Trucks | 35,000 |
Owner's Equity | |
| Equipment | 75,000 | T. Swift, Capital | 196,000 |
| | | | |
|
Total Assets |
$ 306,000 |
Total Liab. & Equity |
$ 306,000 |
Parent Tip: Review the logic above to help your child master the concept of balance sheet worksheet.
