Computing Retained Earnings and Preparing a Classified Balance SheetThe following data, in no particular order, are from the accounts of Brown Corp. as of December 31, 2020, its annual year-end. All amounts are accurate, all accounts have normal balances, and total debits equal total credits. Accounts payable (trade) $28,000 Deferred revenue $7,000Debt retirement fund (long-term) 14,000 Cash dividends payable 17,500Accounts receivable 59,500 Inventory 105,000Income taxes payable 14,000 Land held for future business site 63,000Short-term investments, marketable securities(cost which approximates fair value) 35,000 Equipment and furniture 245,000Bonds payable (long-term) 178,500 Net income for 2020 122,500Accumulated depreciation, equipment and furniture 21,000 Dividends (cash) declared (a debit) 10,500Common stock, par $1 (300,000 shares authorized) 245,000 Prepaid expenses (short-term) 3,500Cash 70,000 Patent 14,000Retained earnings, December 31, 2019 59,500 Prepaid rent (long-term) 7,000Allowance for doubtful accounts 7,000 Investment in capital stock of Zinc ProductsCorporation (long-term) 91,000Premium on common stock 17,500Requireda. Compute the year-end balance of retained earnings. b. Prepare a classified balance sheet as of December 31, 2020.Do not use negative signs with any of your answers.

a. Retained Earnings:

Retained earnings, December 31, 2019    $59,500

Net income for 2020                                  122,500

Dividends (cash) declared (a debit)             (10,500)

Retained earnings, December 31, 2020  $171,500

b. Classified Balance Sheet as of December 31, 2020

Assets

Current Assets:

Cash                                                        $70,000

Accounts receivable                   59,500

Allowance for doubtful accounts 7,000 52,500  

Inventory                                                 105,000

Prepaid expenses (short-term)                 3,500

Short-term investments                          35,000              $266,000

Long-term Investments:

Investment (long-term)                            91,000

Prepaid rent (long-term)                            7,000

Debt retirement fund (long-term)           14,000                $112,000

Long-term Assets:

Land held for future business site        63,000

Equipment and furniture 245,000

Accumulated depreciation,

 equipment and furniture  21,000     224,000

Patent                                                      14,000               $301,000

Total assets                                                                      $679,000

Liabilities and Equities

Current Liabilities:

Accounts payable (trade)                    $28,000

Deferred revenue                                    7,000

Income taxes payable                            14,000

Cash dividends payable                        17,500                $66,500

Long-term Liabilities:

Bonds payable (long-term)                                             $178,500

Total liabilities                                                                $245,000

Equities:

Common stock, par $1

 (300,000 shares authorized)                $245,000

Premium on common stock                         17,500

Retained earnings, December 31, 2020    171,500    $434,000

Total liabilities and equity                                            $679,000

Explanation:

a) Data and Calculations:

Accounts payable (trade) $28,000

Deferred revenue $7,000

Cash dividends payable 17,500

Income taxes payable 14,000

Bonds payable (long-term) 178,500

Common stock, par $1

 (300,000 shares authorized) 245,000

Premium on common stock 17,500

Retained earnings, December 31, 2020  $171,500

Cash 70,000

Accounts receivable 59,500

Allowance for doubtful accounts 7,000  

Inventory 105,000

Prepaid expenses (short-term) 3,500

Short-term investments 35,000

Investment (long-term) 91,000

Prepaid rent (long-term) 7,000

Debt retirement fund (long-term) 14,000

Land held for future business site 63,000

Equipment and furniture 245,000

Accumulated depreciation,

 equipment and furniture 21,000

Patent 14,000

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