Explanation Balance Sheet: Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business. The balance sheet of Corporation MCF as on December 31, 2018 is prepared as follows: Assets: December 31, 2017 December 31, 2018 Particulars $ $ Cash and cash equivalents $17,000 $154,200 Accounts receivable (1) 78,400 28,300 Inventory (2) 50,700 68,300 Prepaid expenses (3) 2,200 900 Land (4) 95,600 41,700 Machinery and equipment (5) 73,500 42,600 Total assets $317,400 $336,000 Liabilities: Accounts payable (6) $40,600 $41,800 Unearned revenue (7) 8,600 20,000 Dividends payable (8) 0 1,000 Income taxes payable (9) 5,500 1,400 Long-term debt (10) 86,000 65,000 Total liabilities 140,700 129,200 Stockholders’ equity: Common stock, no par value (11) 51,200 68,900 Retained earnings (12) 125,500 137,900 Total stockholders’ equity 176,700 206,800 Total liabilities and stockholders’ equity $317,400 $336,000 Working Notes : Compute the amount of accounts receivable . Accounts receivable December 31, 2018 } = { Accounts receivable, December 31, 2017 – Decrease in accounts receivable } = $ 78 , 400 – $ 50 , 100 = $ 28 , 300 (1) Note : Statement of cash flows shows an increase in accounts receivables amount which means that the amount has actually decreased. Hence, deduct the increased amount from previous year balance. Compute the amount of inventory : Inventory, December 31, 2018 } = { Inventory, December 31, 2017 + Increase in inventory } = $ 50 , 700 + $ 17 , 600 = $ 68 , 300 (2) Note : Statement of cash flows shows a decrease in inventory amount which means that the amount has actually increased. Hence, add the decreased amount to previous year balance. Compute the amount of prepaid expenses : Prepaid expenses, December 31, 2018 } = { Prepaid expenses, December 31, 2017 + Increase in Prepaid expenses } = $ 2 , 200 + ( − $ 1 , 300 ) = $ 900 (3) Note : Statement of cash flows shows an increase in prepaid expenses amount which means that the amount has actually increased. Hence, add the increased amount from previous year balance. Compute the amount of land : Land, December 31, 2018 } = { ( Land, December 31, 2017 ) – ( Sale of land – Gain on sale of land ) } = $ 95 , 600 – ( $ 61 , 000 – $ 7 , 100 ) = $ 41 , 700 (4) Compute the amount of machinery and equipment