Question

Spring Step is a designer show warehouse, selling fashionable shoes at prices that people can afford. Its balance sheet for year ended October 31, 2011 contained the following (listed in alphabetically):

Accounts Payable?$110,000

Accounts Receivable?   71,000

Cash?   46,000

Contributed Capital?    91,000

Notes Payable?   25,000

Other Assets?  149,000

Other Liabilities?   79,000

Property, Plant and Equipment ?  236,000

Retained earnings?  197,000

Total Assets?  502,000

Total Liabilities & Equity?   ??

a. Prepare the balance sheet as of October 31, solving for the missing amount. (HINT: Begin by classifying each account as asset, liability or equity. )

b. As of October 31, did most of the financing for assets come from creditors or owners?  Would you define the risk behind this financing as tending toward high or low risk? Why?

NOTE: You may create the balance sheet in Word or Excel

Answer 1

Spring Step
Balancesheet
At October 31, 2011
Assets
Cash	$           46,000
Accounts receivable	$           71,000
Other Assets	$       1,49,000
Property, Plant & Equipment	$       2,36,000
Total assets	$       5,02,000
Liabilities
Accounts Payable	$       1,10,000
Notes Payable	$           25,000
Other Liabilities	$           79,000
Total Liabilities	$       2,14,000
Stockholder's Equity
Common stock	$           91,000
Retained Earnings	$       1,97,000
Total Stockholder's Equity	$       2,88,000
Total Liabilities and Stockholder's Equity	$       5,02,000