King Jewelers is developing its annual financial statements for 2005. The following amounts were correct at December 31, 2005: cash, $42,000; accounts receivable, $51,300; merchandise inventory,

$1 10.000; prepaid insurance, $800; investment in stock of Z corporation (long-term), $26,000; store equipment. $48,000; used store equipment held for disposal. $7,000; accumulated depreciation, store equipment. $9,600; accounts payable, $42,000; long-term note payable, $30,000; income taxes payable, $7,000; retained earnings. $86,500; and common stock, 100,000 shares outstanding, par

$ 1 .00 per share (originally sold and issued at $ 1 . 1 per share).

Required: 1. Based on these data, prepare a 2005 balance sheet. Use the following major captions (list the individual items under these captions):

a. Assets: Current Assets, Long-Term Investments, Fixed Assets, and Other Assets.

b. Liabilities: Current Liabilities and Long-Term Liabilities.

c. Stockholders' Equity: Contributed Capital and Retained Earnings. 2. What is the net book value of the

a. Inventory?

b. Accounts receivable?

c. Store equipment?

d. Note payable (long term)?

Explain what these values mean.