Question

Arrange the following items in proper balance sheet presentation:

Accumulated depreciation	\(309,000
Retained earnings	187,000
Cash	14,000
Bonds payable	136,000
Accounts receivable	54,000
Plant and equipment – original cost	775,000
Accounts payable	35,000
Allowance for bad debts	9,000
Common stock, \)1 par, 100,000 share outstanding	100,000
Inventory	70,000
Preferred stock, $59 par, 1,000 share outstanding	59,000
Marketable securities	24,000
Investments	20,000
Notes payable	34,000
Capital paid in excess of par (common stock)	88,000

Short answer

Common stock, preferred, capital paid in excess of par, and retained earnings are considered the equity and shown as the shareholder funds. The accounts payable, bonds payable, and notes payable are treated as liability and classified as a current liability. The cash, account receivable, inventory, and marketable securities are treated as the current assets, and the plant and machinery are considered the fixed asset of the company.

Step-by-step solution

Retained earnings

Retained earnings refer to the portion of the net income of a company that is held and saved by an organization for future investment and further growth opportunities.

Presentation of the balance sheet

Particulars	Amount ($)
Equity and liabilities
Shareholder’s funds:
Share capital Common stock ($100,000+$88,000) Preferred stock	188,000 59,000
Reserve and surplus (retained earnings)	187,000
Non-current liabilities
Bonds payable	136,000
Current liabilities
Accounts payable	35,000
Notes payable	34,000
Total	639,000
Assets:
Non-current assets:
Fixed assets $775,000 Less: Depreciation $309,000	466,000
Investments	20,000
Current assets:
Current investment (marketable securities)	24,000
Inventories	70,000
Accounts receivable $54,000 Less: allowance for bad debts $9,000	45,000
Cash and cash equivalent	14,000
Total	639,000