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Balance Sheet

The Balance Sheet is a snapshot of a firm’s position at a specific point in time. It is referred to as balance sheet because of the accounting equation Assets must equal the total of Liabilities plus Equity.

Assets = Liabilities + Equity


An asset is a resource with economic value that is owned or controlled with the expectation it will provide future economic benefits.

The asset section of the balance sheet is usually organized from the most liquid assets to the least liquid asset. The two major sets of assets are current and long-term. Current assets are cash, cash equivalents and assets that can be converted to cash within one year. Long-term assets are those whose useful lives are greater than one year.


A liability is the probable future sacrifice of economic benefits arising from present obligations to other entities.

The liabilities section of the balance sheet is organized from the nearest due dates to the farthest due dates. Liabilities are usually classified as either Current Liabilities, those due within one year, or Long-term Debt.

Stockholder's Equity

Equity is the portion of a company’s value that belongs to the owners.

The two important parts of the equity section of the balance sheet are contributed capital and retained earnings. Contributed capital includes common stock, preferred stock and additional paid in capital. Retained earnings is the profit that has been earned but not distributed.

Entity Name
Balance Sheet
Current Assets
Cash $ 72,186
Trading Securities 16,941
Accounts Receivable $ 298,236
Less: Allowance for doubtful accounts 2,730 295,506
Notes Receivable 30,000
Inventories 687,371
Supplies 12,885
Prepaid Rent 33,000
Total Currant Assets $ 1,147,889
Long-term assets
Equity Investments 115,000
Bonds 75,000
Total Long-term assets 190,000
Property, plant, and equipment
Land 15,000
Buildings 175,000
Less: Accumulated depreciation 52,500 122,500
Machinery 66,000
Less: Accumulated depreciation 13,000 53,000
Total Property, Plant, and Equipment 290,500
Intangible assets
Goodwill 80,000
Total Assets $ 1,708,389
Equity and Liabilities
Current liabilities
Accounts payable $ 191,000
Notes payable (Due in current year)  65,000
Accrued interest on notes payable 650
Income tax Payable 64,000
Accrued salaries and wages 7,650
Deposits received from customers 1,200
Total current liabilities $ 329,500
Long-term debt
20 year 8% Bonds due in 3 years 600,000
Total Liabilities 929,500
Stockholders' Equity
Common stock $10 par value $ 500,000
Additional paid in capital 128,889 628,889
Retained earnings 110,000
Accumulated other comprehensive income 40,000
Total Stockholders' Equity 778,889
Total liabilities and Stockholders' equity $ 1,708,389