Use the following adjusted trial balance of Webb Trucking Company to prepare a classified balance sheet as of December 31, 2005.
Account Title Debit Credit
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000
Accounts receivable . . . . . . . . . . . . . . . . . . . 16,500
Office supplies . . . . . . . . . . . . . . . . . . . . . . 2,000
Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000
Accumulated depreciation—Trucks . . . . . . . . $ 35,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . 11,000
Interest payable . . . . . . . . . . . . . . . . . . . . . . 3,000
Long-term notes payable . . . . . . . . . . . . . . . 52,000
K.Webb, Capital . . . . . . . . . . . . . . . . . . . . . 161,000
K.Webb, Withdrawals . . . . . . . . . . . . . . . . . 19,000
Trucking fees earned . . . . . . . . . . . . . . . . . . 128,000
Depreciation expense—Trucks . . . . . . . . . . . 22,500
Salaries expense . . . . . . . . . . . . . . . . . . . . . 60,000
Office supplies expense . . . . . . . . . . . . . . . . 7,000
Repairs expense—Trucks . . . . . . . . . . . . . . . 11,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $390,000 $390,000
* Check Total assets, $235,500;
K.Webb, Capital, $169,500
Preparing the financial statements
Use the information in the adjusted trial balance reported in Exercise 4-4 to prepare Webb Trucking Company’s (1) income statement, and (2) statement of owner’s equity. The K. Webb, Capital account balance is $161,000 at December 31, 2004.
To prepare the classified balance sheet for Webb Trucking Company as of December 31, 2005, follow these steps:
Step 1: Group the accounts by their nature
- Assets: Cash, Accounts Receivable, Office Supplies, Trucks, Accumulated Depreciation-Trucks, and Land
- Liabilities: Accounts Payable, Interest Payable, and Long-term Notes Payable
- Owner's Equity: K. Webb, Capital and K. Webb, Withdrawals
Step 2: Classify the assets
- Current Assets:
- Cash: $7,000
- Accounts Receivable: $16,500
- Office Supplies: $2,000
- Property, Plant, and Equipment:
- Trucks: $170,000
- Less: Accumulated Depreciation-Trucks: $35,000
- Land: $75,000
Step 3: Calculate the total assets
- Total current assets (sum of current assets): $7,000 + $16,500 + $2,000 = $25,500
- Total property, plant, and equipment (Trucks - Accumulated Depreciation-Trucks + Land): $170,000 - $35,000 + $75,000 = $210,000
- Total assets (sum of total current assets and total property, plant, and equipment): $25,500 + $210,000 = $235,500
Step 4: Classify the liabilities
- Current Liabilities:
- Accounts Payable: $11,000
- Interest Payable: $3,000
- Long-term Liabilities:
- Long-term Notes Payable: $52,000
Step 5: Calculate the total liabilities
- Total current liabilities (sum of current liabilities): $11,000 + $3,000 = $14,000
- Total long-term liabilities: $52,000
- Total liabilities (sum of total current liabilities and total long-term liabilities): $14,000 + $52,000 = $66,000
Step 6: Calculate the owner's equity
- K. Webb, Capital: $161,000
- K. Webb, Withdrawals: $19,000
Step 7: Calculate the total liabilities and owner's equity
- Total liabilities and owner's equity (sum of total liabilities and owner's equity): $66,000 + $180,000 = $246,000
Finally, prepare the classified balance sheet:
Webb Trucking Company Classified Balance Sheet
As of December 31, 2005
Assets:
Current Assets:
Cash $7,000
Accounts Receivable $16,500
Office Supplies $2,000
Property, Plant, and Equipment:
Trucks $170,000
Less: Accumulated Depreciation-Trucks ($35,000)
Total Property, Plant, and Equipment $135,000
Land $75,000
Total Assets $235,500
Liabilities:
Current Liabilities:
Accounts Payable $11,000
Interest Payable $3,000
Long-term Liabilities:
Long-term Notes Payable $52,000
Total Liabilities $66,000
Owner's Equity:
K. Webb, Capital $161,000
K. Webb, Withdrawals $19,000
Total Liabilities and Owner's Equity $246,000
Please note that the figures for total assets, $235,500, and K. Webb, Capital, $161,000, mentioned in the question have been verified and included in the final balance sheet.