1. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 15-4 Preparing a Balance Sheet

2. CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 15-4 BALANCE SHEET INFORMATION ON A WORK 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

3. CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 15-4 BALANCE SHEET INFORMATION ON A WORK SHEET 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.

4. CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 15-4 CURRENT ASSETS SECTION OF A BALANCE SHEET 1 2 3 4 5 page 465 3.Book value of accounts receivable 4.Asset accounts1.Heading 2.Begin assets section5.Current assets

5. CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 15-4 PLANT ASSETS SECTION OF A BALANCE SHEET 1 2 3 page 466 4 5 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.

6. CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 15-4 LIABILITIES SECTION OF A BALANCE SHEET 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

7. CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 15-4 LIABILITIES SECTION OF A BALANCE SHEET 1 3 page 467 1.Heading 2.Account title and amount of each current liability 3.Total liabilities 2

8. CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 15-4 STOCKHOLDERS’ EQUITY SECTION OF 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

9. CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 15-4 STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEET 1 page 468 5.Total liabilities and stockholders’ equity 4 6 5 23 2.Capital stock 1.Stockholders’ Equity 3.Retained earnings 4.Total stockholders’ equity 6.Double rules

10. CENTURY 21 ACCOUNTING © Thomson/South-Western 10 LESSON 15-4 COMPLETED BALANCE SHEET page 469 (continued on next slide)

11. CENTURY 21 ACCOUNTING © Thomson/South-Western 11 LESSON 15-4 COMPLETED BALANCE SHEET page 469 (continued from previous slide)

12. CENTURY 21 ACCOUNTING © Thomson/South-Western 12 LESSON 15-4 TERMS REVIEW current liabilities long-term liabilities supporting schedule page 471