Reference no: EM132710933

Your friend cannot get the balance sheet of his Company - Tasty Brewery Limited- to balance! He needs your help. His shareholders are demanding a classified balance sheet.

For the year ended December 31, 2020

Assets

Cash $55,500                      Accounts payable $11,000

Building $40,000                    Accumulated Depreciation 8,000

Unearned Revenue 12,000              Salary payable 2,500

Prepaid insurance 3,000

Accounts receivable 6,000

Supplies 1,500                     Partners' Equity 72,500

Totals $118,000                     Totals $94,000

Additional notes:

You have determined that the shareholders incorporated Tasty Brewery Limited with $48,250 in share capital.

• 50% of the unearned revenue will not be earned until June 2022.

Required:

Problem a) Prepare, in good format, the classified Balance Sheet as at December 31, 2020.

Problem b) Why do clients prefer a to receive a classified balance sheet? (i.e. how does it help them?)