LESSON 15-4
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Transcript of LESSON 15-4
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 15-4LESSON 15-4
Preparing a Balance Sheet
CENTURY 21 ACCOUNTING © Thomson/South-Western
2
LESSON 15-4
BALANCE SHEET INFORMATION ON A BALANCE SHEET INFORMATION ON A WORK SHEETWORK SHEET page 464
The balance sheet columns of a work sheet
The owners’ equity statement
A corporation’s balance sheet reports assets, liabilities, & stockholders’ equity on a specific date
Information used to prepare a balance sheet is obtained from two sources
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
BALANCE SHEET INFORMATION ON A WORK BALANCE SHEET INFORMATION ON A WORK SHEETSHEET page 464
An asset’s book value is reported on a balance sheet by listing three amounts: The balance of the asset
account The balance of the
asset’s contra account The book value
A business owning both current & plant assets usually lists them under separate headings on the balance sheet
Some asset accounts have related contra accounts that reduce the related account on the balance sheet The difference between an asset’s account balance & its related
contra account balance is known as book value.
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
CURRENT ASSETS SECTION OF A BALANCE CURRENT ASSETS SECTION OF A BALANCE SHEETSHEET
11
22
33
44
55
page 465
3. Book value of accounts receivable
4. Asset accounts1. Heading
2. Begin assets section 5. Current assets
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
PLANT ASSETS SECTION OF A PLANT ASSETS SECTION OF A BALANCE SHEETBALANCE SHEET
11
22
33
page 466
44
551. Write the heading Plant Assets.
2. Calculate the book value of office equipment.
3. Use the same procedure to calculate the book value of store equipment.
4. Calculate total plant assets.
5. Calculate total assets.
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
LIABILITIES SECTION OF A BALANCE LIABILITIES SECTION OF A BALANCE SHEETSHEET page 464
To prepare the liabilities section of the balance sheet, use information from the work sheet
Liabilities are classified according to the length of time until they are due
Liabilities due within a short time, usually within a year, are called current liabilities
Liabilities owed for more than a year are called long-term liabilities
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
LIABILITIES SECTION OF A BALANCE LIABILITIES SECTION OF A BALANCE SHEETSHEET
11
33
page 467
1. Heading
2. Account title and amount of each current liability
3. Total liabilities
22
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
STOCKHOLDERS’ EQUITY SECTION STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEETOF A BALANCE SHEET page 464
The stockholders’ equity section contains the total amounts of capital stock & retained earnings They are calculated &
reported on the statement of stockholders’ equity
A major difference between balance sheets of a corporation & a proprietorship is the owners’ equity section
The owner’s equity section of a corporation is labeled Stockholder’s Equity
CENTURY 21 ACCOUNTING © Thomson/South-Western
9
LESSON 15-4
STOCKHOLDERS’ EQUITY SECTION OF A STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEETBALANCE SHEET
11
page 468
5. Total liabilities and stockholders’ equity
44
66
55
2233
2. Capital stock
1. Stockholders’ Equity
3. Retained earnings
4. Total stockholders’ equity
6. Double rules
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
COMPLETED BALANCE SHEETCOMPLETED BALANCE SHEET page 469
(continued on next slide)
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
COMPLETED BALANCE SHEETCOMPLETED BALANCE SHEET page 469(continued from previous
slide)
CENTURY 21 ACCOUNTING © Thomson/South-Western
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LESSON 15-4
TERMS REVIEWTERMS REVIEW
current liabilities long-term liabilities supporting schedule
page 471