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.

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LESSON 15-4

CURRENT ASSETS SECTION OF A BALANCE CURRENT ASSETS SECTION OF A BALANCE SHEETSHEET

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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

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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

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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