The following items were taken from the financial statements of Buttercup Company. (All dollars are in thousands.) Mortgage payable $2,443 Accumulated depreciation $3,655 Prepaid insurance 880 Accounts payable 1,444 Property, plant, and equipment 11,500 Notes payable after 2022 1,200 Long-term investments 1,100 Common stock 5,000 Short-term investments 3,690 Retained earnings 8,480 Notes payable in 2022 1,000 Accounts receivable 1,696 Cash 2,600 Inventories 1,756 Prepare a classified balance sheet in good form as of December 31, 2015. (Enter amounts in thousands. List current assets in order of liquidity.)

Answer and Explanation:

The preparation of the classified balance sheet is presented below:

Buttercup Company

Balance Sheet

December 31, 2022

(in thousands)

Assets

Current Assets  

Cash $2,600  

Short-term investments $3,690  

Accounts receivable $1,696  

Inventories $1,756  

Prepaid expenses$880  

Total current assets $10,622

Long-term investments $1,100

Property, plant, and equipment  

Property, plant, and equipment $11,500  

Less: Accumulated depreciation -$3,655    $7,845

Total assets $19,567

Liabilities and Owner's Equity

Current liabilities  

Notes payable in 2022 $1,000  

Accounts payable $1,444  

Total current liabilities  $2,444

Long-term liabilities  

Mortgage payable$2443  

Notes payable (after 2022) $1,200  

Total long-term liabilities $3,643

Total liabilities $6,087

Owner's equity  

Owner’s capital $13,480 ($5,000 + $8,480)

Total liabilities and owner's equity $19,567

A credit policy contains guidelines that structure the amount of credit granted to customers, as well as how collections are to be conducted for delinquent accounts. ... It covers the normal payment terms that the company will allow to its customers, and the circumstances under which alternative terms are allowed

Explanation: