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The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year). KORVER SUPPLY COMPANY Balance Sheet At December 31, 2020 Assets Cash$160,000 Accounts receivable 320,000 Inventory 270,000 Furniture and fixtures (net) 180,000 Total assets$930,000 Liabilities and Shareholders’ Equity Accounts payable (for merchandise)$270,000 Notes payable 280,000 Interest payable 7,000 Common stock 110,000 Retained earnings 263,000 Total liabilities and shareholders’ equity$930,000 Transactions during 2021 (current year) were as follows: 1.Sales to customers on account$930,000 2.Cash collected from customers 910,000 3.Purchase of merchandise on account 620,000 4.Cash payment to suppliers 630,000 5.Cost of merchandise sold 570,000 6.Cash paid for operating expenses 290,000 7.Cash paid for interest on notes 14,000 Additional Information: The notes payable are dated June 30, 2020, and are due on June 30, 2022. Interest at 5% is payable annually on June 30. Depreciation on the furniture and fixtures for 2021 is $33,000. The furniture and fixtures originally cost $430,000. Required: Prepare a classified balance sheet at December 31, 2021, by updating ending balances from 2020 for transactions during 2021 and the additional information. The cost of furniture and fixtures and their accumulated depreciation are shown separately. (Amounts to be deducted should be indicated by a minus sign.)

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Balance Sheet 2016

$ 697,000 TOTAL CURRENT ASSETS

$ 2,064,000 TOTAL COMPETENT ASSETS

$ 2,761,000 TOTAL ASSETS

$ 303,000 TOTAL CURRENT LIABILITY

$ 312,000 TOTAL UNLIMITED LIABILITY

$ 615,000 TOTAL LIABILITY

$ 2,146,000 TOTAL EQUALITY

$ 2,761,000 TOTAL EQUALITY + LIABILITY

Explanation:

Balance Sheet 2016

$ 67,000 Cash

$ 132,000Marketable Securities

$ 50,000 Treasury Bills

$ 115,000 Accounts Receivable

$ 215,000Inventory

$ 16,000 Prepaid Expenses

$ 50,000 Note Receivable

$ 12,000 Interest Receivable

$ 40,000 Employee Loans

$ 697,000 TOTAL CURRENT ASSETS

$ 280,000Land

$ 637,000 Machinery and Equipment

– Depreciation $ 210,000Accum

$ 1550,000Buildings

– Depreciation $ 620,000Accum

$ 152,000Patents

Franchise $ 40,000

$ 200,000Not Receivable

$ 35,000 Long Term Market Securities

$ 2,064,000 TOTAL COMPETENT ASSETS

$ 2,761,000 TOTAL ASSETS

$ 189,000 Accounts Payable

$ 40,000 Taxes Payable

$ 48,000 Deferred Income

$ 16,000 Interest Payable

$ 10,000 dividends payable

$ 303,000 TOTAL CURRENT LIABILITY

$ 12,000 Deferred Income

$ 300,000 Notes Payable

$ 312,000 TOTAL UNLIMITED LIABILITY

$ 615,000 TOTAL LIABILITY

$ 2,000,000 Joint Stock

Retained Earnings $ 146,000

$ 2,146,000 TOTAL EQUALITY

$ 2,761,000 TOTAL EQUALITY + LIABILITY

Current Assets Account, the liquidity speed criteria are to be less than one year

Money

Marketable Securities

Treasury Bills

Accounts receivable

Inventory

Prepaid Expenses

Note Receivable

Interest Receivable

Employee Loans

Non-Current Assets Account, The liquidity speed criteria are to be more than one year and are called fixed assets

Land

Machinery and Equipment

Depreciation Accum

Building

Depreciation Accum

Patents

Franchise

Note Receivable

Long Term Marketable Securities

Current Liabilities Account, the speed liquidity criteria are to be less than one year

Accounts payable

Taxes Payable

Deferred Income

Interest Payable

Dividends payable

Non-Current Liabilities Account, the liquidity speed criteria are to be more than one year and are called long-term financing

Deferred Income

Notes Payable

Total Equity Account

Ordinary Stock

Custody earnings

Liquidity is defined as the speed at which assets are converted into cash, assets that take less days to buy or sell are more liquid than others.

Cash is the most liquid asset, then Accounts Receivable and Inventories for the end, in the middle are different assets like capital investments.

Prepaid expenses are not liquid because these accounts do not mean that the company can get money if the company does not have rights to something.