The financial statement columns of the work sheet for Acme Company at December 31, 2007, are as follows

The financial statement columns of the work sheet for Acme Company at December 31, 2007, are as follows:


Acme Company
Work Sheet
For the year ended December 31, 2007

Income Statement Balance Sheet

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Accounts Debit Credit Debit Credit                                                                                               SOLUTION

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Cash $14000

Accounts Receivable 11000

Supplies 4000

Prepaid Insurance 6000

Video Equipment 210000

Accumulated Depreciation--

Video Equipment 26000

Accounts Payable 24000

Note Payable 60000

Salaries Payable 3000

Common Stock 90000

Retained Earnings 22000

Dividends 15000

Video Rental Revenue 138000

Advertising Expense 21000

Depreciation Expense 12000

Insurance Expense 3000

Rent Expense 17000

Salaries Expense 44000

Supplies Expense 6000

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Totals 103000 138000 260000 225000

Net Income 35000 35000

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138000 138000 260000 260000

Instructions:

(a) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2007.

(b) Prepare a classified balance sheet for Acme Company at December 31, 2007 assuming the note payable is a long-term liability.
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