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LESSON 15-4

LESSON 15-4. Preparing a Balance Sheet. BALANCE SHEET INFORMATION ON A WORK SHEET. page 464. 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.

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LESSON 15-4

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  1. LESSON 15-4 Preparing a Balance Sheet

  2. BALANCE SHEET INFORMATION ON A WORK SHEET page 464 • 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 • The balance sheet columns of a work sheet • The owners’ equity statement LESSON 15-4

  3. BALANCE SHEET INFORMATION ON A WORK SHEET page 464 • 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. • 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 LESSON 15-4

  4. CURRENT ASSETS SECTION OF A BALANCE SHEET page 465 1 2 3 4 5 1. Heading 3. Book value of accounts receivable 4. Asset accounts 2. Begin assets section 5. Current assets LESSON 15-4

  5. 4 5 PLANT ASSETS SECTION OF A BALANCE SHEET page 466 1 2 3 1. 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. LESSON 15-4

  6. LIABILITIES SECTION OF A BALANCE SHEET page 464 • 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 • To prepare the liabilities section of the balance sheet, use information from the work sheet LESSON 15-4

  7. 2 LIABILITIES SECTION OF A BALANCE SHEET page 467 1. Heading 2. Account title and amount of each current liability 1 3. Total liabilities 3 LESSON 15-4

  8. STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEET page 464 • 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 • The stockholders’ equity section contains the total amounts of capital stock & retained earnings • They are calculated & reported on the statement of stockholders’ equity LESSON 15-4

  9. 3 2 4 5 6 STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEET page 468 1 1. Stockholders’ Equity 5. Total liabilities and stockholders’ equity 2. Capital stock 6. Double rules 3. Retained earnings 4. Total stockholders’ equity LESSON 15-4

  10. COMPLETED BALANCE SHEET page 469 (continued on next slide) LESSON 15-4

  11. COMPLETED BALANCE SHEET page 469 (continued from previous slide) LESSON 15-4

  12. TERMS REVIEW page 471 • current liabilities • long-term liabilities • supporting schedule LESSON 15-4

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