BALANCE SHEET EXERCISES EXERCISE 1 (LO prepare a Balance Sheet) Problem The balance sheet of a small business, Bay Corp, at the start of the year is as follows: Amounts are expressed in . Land & Buildings 250 000 Capital 300 000 Equipment 40 000 Retained Earnings 50 000 Inventory 50 000 Accounts Payable 20 000 Account receivable 80 000 LT Loans 100 000 Cash 50 000 During the year the following transactions took place: 1. Acquired 21,000 of equipment by paying 15,000 cash and agreeing to pay the balance owed within a month. 2. Acquired inventories on credit for 10,000. 3. Received 30,000 cash from customers previously billed. 4. Paid wages for December (last month before closing the books) for 5,000. 5. Paid electricity for the last quarter for 6,000. Prepare a) demonstrate the effect of these transactions on the balance sheet (record the transactions using the accounting equation) and b) show the balance sheet in horizontal format at the end of the year Utilize the simple balance sheet template available in excel balancing the equation after the transactions took place