Problem - Listed below in random order are the items to be included in the balance sheet of Rocky Mountain Lodge at December 31, 2015:

Equipment......$ 39,200

Land..................425,000

Accounts Payable....54,800

Accounts Receivable....10,600

Salaries Payable......33,500

Interest Payable......12,000

Building...............$500,000

Capital Stock..........135,000

Cash..................31,400

Furnishings........58,700

Snowmobiles......15,400

Notes Payable.....620,000

Retained Earnings......?

Instructions

a. Prepare a balance sheet at December 31, 2015. Include a proper heading and organize your balance sheet similar to Exhibit 2-9. You will need to compute the amount to be shown for Retained Earnings.

b. Assume that no payment is due on the notes payable until 2017. Does this balance sheet indicate that the company is in a strong financial position as of December 31, 2015? Explain briefly.