Appendix I
Review Exercise Solutions
416
b) Prepare statement of owner’s equity
George’s Gardening Supplies
Statement of Owner’s Equity
For the Year Ended December 31, 2016
Gregg, Capital at January 1, 2016
$80,000
Add
Additional Investment
$10,000
Net Income
40,370
50,370
Subtotal
130,370
Less
Gregg, Drawings
5,000
Gregg, Capital at December 31, 2016
$125,370
c) Prepare the classified balance sheet
George’s Gardening Supplies
Classified Balance Sheet
As at December 31, 2016
Assets
Current Assets
Cash
$54,830
Accounts Receivable
33,500
Inventory
33,440
Prepaid Insurance
3,600
Total Current Assets
$125,370
Property, Plant & Equipment
Equipment
45,000
Less: Accumulated Depreciation
(5,000)
Total Property, Plant, & Equipment
40,000
Total Assets
$165,370
Liabilities
Current Liabilities
Accounts Payable
$10,000
Current Portion of Bank Loan
10,000
Total Current Liabilities
$20,000
Long-Term Liabilities
Long-Term Portion of Bank Loan
20,000
Total Long-Term Liabilities
20,000
Total Liabilities
40,000
Owner’s Equity
Gregg, Capital
125,370
Total Owner’s Equity
125,370
Total Liabilities and Owner’s Equity
$165,370
