Prepare Ending Balance Sheet On December 31, 2010, a fire destroyed a significant portion of the Richey Company accounting records. Only the January 1, 2010 balance sheet, the statement of cash flows for 2010, and several additional documents were saved as follows: The remaining financial documents reveal the following additional data: 1. The new building was acquired on December 31, 2010. The related mortgage requires equal annual repayments of the principal over a five-year period beginning December 31, 2012. 2. The company issued a stock dividend of 200 shares of common stock on December 14, 2010. On the date of declaration, the stock was selling for $18 per share. 3. The equipment that was sold had an original cost of $1,900. Required Prepare a December 31, 2010 balance sheet for Richey Company. Include supporting calculations.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Prepare Ending Balance Sheet On December 31, 2010, a fire destroyed a significant portion of the Richey Company accounting records. Only the January 1, 2010 balance sheet, the statement of cash flows for 2010, and several additional documents were saved as follows:
The remaining financial documents reveal the following additional data:
1. The new building was acquired on December 31, 2010. The related mortgage requires equal annual repayments of the principal over a five-year period beginning December 31, 2012.
2. The company issued a stock dividend of 200 shares of common stock on December 14, 2010. On the date of declaration, the stock was selling for $18 per share.
3. The equipment that was sold had an original cost of $1,900.
Required
Prepare a December 31, 2010 balance sheet for Richey Company. Include supporting calculations.
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