The following items were taken from the records of a company as of 31 December, 20XX:

Accounts payable	47,000		Long-term notes receivable	35,000
Accounts receivable	22,000		Patent	6,000
Building	169,000		Accrued expenses	17,000
Cash	15,000		Short-term notes payable	135,000
Equipment	30,000		Share capital	1,000
Retained earnings	?		Bonds payable	75,000
Sales	123,000		Dividends paid	30,000
Depreciation expense	18,000
Cost of goods sold	75,000		Goodwill	28,000
Long-term investments	100,000
Inventory	79,000		Short-term investments	56,000
Interest payable	1,000		Long-term debt	150,000

2.1 Prepare a balance sheet.

Use the amounts given to complete the balance sheet below (ignore depreciation as a balance sheet entry):

Blue Bird Publishing

Balance sheet

31 December 20XX

Assets:		Liabilities:
Current assets:		Current liabilities:
Cash		Accounts payable
Accounts receivable		Accrued expenses
Inventory		Interest payable
Short-term investments		Short-term notes payable
Total current assets		Total current liabilities
Non-current assets:		Non-current liabilities
Long-term investments		Bonds payable
Long-term notes receivable		Long-term debt
		Total non-current liabilities
Property, plant, and equipment:		Total liabilities
Building
Equipment
Net property, plant, and equipment
		Shareholders equity
Intangible assets:		Share capital
Goodwill		Retained earnings
Patents
Total intangible assets		Total shareholders equity
Total non-current assets
Total assets		Total liabilities and shareholders equity

2.2 Calculate retained earnings.

Calculate the amount for retained earnings showing all steps of your calculations including the formula you use.

Start writing here:

2.3 Explain retained earnings.

In your own words, use an example to explain what retained earnings are and how they relate to the balance sheet. (Max. 5 lines)

Start writing here: