Chapter 5 - Unit 10
Classified Financial Statements
Monday, April 12, 2010
Look at Figure 5.6 Page
173
Monday, April 12, 2010
Look at Figure 5.6 Page
173
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Which debts must be paid in a year?
Monday, April 12, 2010
Look at Figure 5.6 Page
173
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Which debts must be paid in a year?
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Is there sufficient cash to pay debts?
Monday, April 12, 2010
Look at Figure 5.6 Page
173
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Which debts must be paid in a year?
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Is there sufficient cash to pay debts?
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Which debts must be paid in future years?
Monday, April 12, 2010
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Need to classify data on financial statements,
this way more information is provided in a
way that is easily interpreted
Monday, April 12, 2010
Classified Balance Sheet
Monday, April 12, 2010
Classified Balance Sheet
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Assets - current and fixed
Monday, April 12, 2010
Classified Balance Sheet
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Assets - current and fixed
Current - an asset that in the normal course of
operations will be converted to cash, sold or
consumed during the year (cash, government
bonds, A/R, prepaid expenses)
Monday, April 12, 2010
Classified Balance Sheet
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Assets - current and fixed
Current - an asset that in the normal course of
operations will be converted to cash, sold or
consumed during the year (cash, government
bonds, A/R, prepaid expenses)
Still listed in order of liquidity
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Monday, April 12, 2010
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Prepaid Expenses - expenses that are paid in
advance - ie. rent, insurance
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Prepaid Expenses - expenses that are paid in
advance - ie. rent, insurance
Fixed - assets that have a long life, over a year
- ex building, land, trucks, etc.
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Prepaid Expenses - expenses that are paid in
advance - ie. rent, insurance
Fixed - assets that have a long life, over a year
- ex building, land, trucks, etc.
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Assets with the longest life are generally
listed first (land, building, equipment,
trucks)
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Liabilities - current and long-term
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Liabilities - current and long-term
Current - due to be paid within one year listed in order to be paid (a/p, taxes payable,
salaries payable, loans payable)
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Liabilities - current and long-term
Current - due to be paid within one year listed in order to be paid (a/p, taxes payable,
salaries payable, loans payable)
Long-Term - liabilities that are not due to be
paid in a year - longer term (mortgages and
long-term long bank loan
Monday, April 12, 2010
Franklin Corporation
Balance Sheet
October 31, 2005
Assets
Current assets
Cash
Short-term investments
Accounts receivable
Inventories
Supplies
Prepaid insurance
Total current assets
Long-term investments
Investment in stock of Walters Corp.
Investment in real estate
Property, plant, and equipment
Land
Office equipment
$24,000
Less: Accumulated depreciation5,000
Intangible assets
Patents
Total assets
$6,600
2,000
7,000
4,000
2,100
400
$22,100
5,200
2,000
7,200
10,000
19,000
29,000
3,100
$61,400
Liabilities and Stockholders' Equity
Current liabilities
Notes payable
Accounts payable
Salaries payable
Unearned revenue
Interest payable
Total current liabilities
Long-term liabilities
Mortgage payable
Notes payable
Total long-term liabilities
Total liabilities
Stockholders' equity
Common stock
Retained earnings
Total stockholders' equity
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$11,000
2,100
1,600
900
450
$16,050
10,000
1,300
11,300
27,350
14,000
20,050
34,050
$61,400
Monday, April 12, 2010
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Remember - Owner’s Equity - the value
increases as the business profits and decreases
as it doesn’t
Monday, April 12, 2010
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Remember - Owner’s Equity - the value
increases as the business profits and decreases
as it doesn’t
Instead of having all the effects of OE on the
balance sheet - you can prepare a Statement of
Owner’s Equity
Monday, April 12, 2010
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Remember - Owner’s Equity - the value
increases as the business profits and decreases
as it doesn’t
Instead of having all the effects of OE on the
balance sheet - you can prepare a Statement of
Owner’s Equity
This is a supporting statement prepared
separately from the Balance Sheet - the total is
put on the balance sheet
Monday, April 12, 2010
Accounts Receivable
Monday, April 12, 2010
Accounts Receivable
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Many businesses have lots of Accounts
Receivables - as they have many customers
Monday, April 12, 2010
Accounts Receivable
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Many businesses have lots of Accounts
Receivables - as they have many customers
The Balance Sheet will become very cluttered
if you put all the accounts receivable on it
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Accounts Receivable
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Many businesses have lots of Accounts
Receivables - as they have many customers
The Balance Sheet will become very cluttered
if you put all the accounts receivable on it
Schedule of Accounts Receivable - a
supporting schedule that provides details
about every A/R account - put the final total
on the Balance Sheet
Monday, April 12, 2010
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page 182 Q 15,16
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Ex 4-6, 9, 10
Monday, April 12, 2010