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How do I reflect the loss of an uninsured asset?
Asked Sep 21, 2007, 10:04 AM
I am supposed to assume that on June 30th after my balance sheet has been prepared, a fire destroyed one of my tents, which had cost $14,300. The tent was not insured. Explain what changes would be required in my June 30th balance shee to reflect the loss of this asset.
As you can see I understand how to subtract it on the asset side. But I do not know what category to take it from on the Liability side. I'm assuming that he owned the tent so the only thing I can guess it would come out of is the Capital Stock. But it's not actual stock so that could be wrong.
HERE COME THE CLOWNS!
June 30, 2007
Assets Liabilities & Stockholders' Equity
Cash $32,520 Liabilities:
Notes receivable 9,500 Notes payable $180,000
Accounts receivable 7,450 Accounts payable 26,100
Animals 189,060 Salaries payable 9,750
Cages 24,630 Total liabilities $215,850
Costumes 31,500 Owners' equity:
Props and equipment 89,580 Capital stock $310,000
Tents 63,000 Retained earnings 27,230 337,230
Trucks & wagons 105,840
Total $ 553,080 Total $553,080
b. Explain what changes would be required in your June 30 balance sheet to reflect
The loss of an uninsured tent that cost $14,300.