Below is a list of account balances for Currie Hospital as of December 31, 2013. Prepare a balance sheet as of December 31, 2013, in proper form. (Hint: You will need to compute the net assets account. Assume that all net assets at the beginning of the year are unrestricted.)
Account
Balance
Gross plant & equipment
$6,000,000
Accounts payable
130,000
Inventories
100,000
Other current liabilities
70,000
Net accounts receivable
650,000
Accrued expenses
100,000
Accumulated depreciation
200,000
Long-term debt
5,000,000
Cash
210,000
Currie Hospital
Balance Sheet
As of December 31, 2013
Assets
Current Assets:
Cash $210,000
Net Accounts Receivable $650,000
Inventories $100,000
Total Current Assets $960,000
Property and Equipment:
Gross Plant & Equipment $6,000,000
Less: Accumulated Depreciation $200,000
Net Property and Equipment $5,800,000
Total Assets $6,760,000
Liabilities and Net Assets
Current Liabilities:
Accounts Payable $130,000
Accrued Expenses $100,000
Other Current Liabilities $70,000
Total Current Liabilities $300,000
Long-Term Debt $5,000,000
Total Liabilities $5,300,000
Net Assets:
Unrestricted Net Assets $1,460,000
Total Liabilities and Net Assets $6,760,000
To prepare a balance sheet, we need to categorize each account into its respective section: assets, liabilities, and equity.
1. ASSETS:
- Gross plant & equipment: $6,000,000
- Net accounts receivable: $650,000
- Inventories: $100,000
- Cash: $210,000
2. LIABILITIES:
- Accounts payable: $130,000
- Other current liabilities: $70,000
- Accrued expenses: $100,000
- Long-term debt: $5,000,000
Now, let's calculate the net assets (equity) account by subtracting the accumulated depreciation from the gross plant & equipment:
Net assets = Gross plant & equipment - Accumulated depreciation
Net assets = $6,000,000 - $200,000
Net assets = $5,800,000
3. EQUITY:
- Net assets: $5,800,000
Now we can prepare the balance sheet:
Currie Hospital
Balance Sheet as of December 31, 2013
ASSETS
Gross plant & equipment $6,000,000
Net accounts receivable $650,000
Inventories $100,000
Cash $210,000
Total Assets $6,960,000
LIABILITIES
Accounts payable $130,000
Other current liabilities $70,000
Accrued expenses $100,000
Long-term debt $5,000,000
Total Liabilities $5,300,000
EQUITY
Net assets $5,800,000
TOTAL LIABILITIES & EQUITY $6,960,000
To prepare the balance sheet as of December 31, 2013, we need to categorize the accounts into their respective sections.
Here is the balance sheet in proper form:
Currie Hospital
Balance Sheet
December 31, 2013
Assets:
Cash: $210,000
Net Accounts Receivable: $650,000
Inventories: $100,000
Gross Plant & Equipment: $6,000,000
Accumulated Depreciation: ($200,000) (*Note: Accumulated depreciation is a contra-asset account and is deducted from the gross plant & equipment.)
Total Assets: $6,760,000
Liabilities:
Accounts Payable: $130,000
Accrued Expenses: $100,000
Other Current Liabilities: $70,000
Long-Term Debt: $5,000,000
Total Liabilities: $5,300,000
Net Assets:
Net Assets = Total Assets - Total Liabilities
Net Assets: $6,760,000 - $5,300,000 = $1,460,000
Equity:
Unrestricted Net Assets: $1,460,000
Total Liabilities and Net Assets: $5,300,000 + $1,460,000 = $6,760,000
Note that the balance sheet presents the financial position of Currie Hospital as of December 31, 2013.