The following are the transactions of Spotlighter, Inc., for the month of January: a. Borrowed $5,540 from a local bank on a note due in six months.
b. Received $6,230 cash from investors and issued common stock to them.
c. Purchased $2,600 in equipment, paying $1,000 cash and promising the rest on a note due in one year.
d. Paid $1,100 cash for supplies.
e. Bought and received $1,500 of supplies on account

Required:
Prepare a classified balance sheet for Spotlighter, Inc., as of January 31.

Spotlighter  Inc.

Classified Balance Sheet as at January 31

ASSETS

Equipment                                                          $2,600

Supplies ($1,100 + $1,500)                                 $2,600

Cash ($5,540 + $6,230 - $1,000 - $1,100)        $9,670

TOTAL ASSETS                                                 $14,870

EQUITY AND LIABILITIES

LIABILITIES

Accounts Payable                                              $1,500

Bank note                                                          $5,540

Note Payable                                                     $1,600

TOTAL LIABILITIES                                           $8,640

EQUITY

Common Stock                                                 $6,230

TOTAL EQUITY                                                 $6,230

TOTAL EQUITY AND LIABILITIES                   $14,870

Explanation:

A Balance Sheet shows the Assets, Liabilities and Equity existing at the Reporting Date.

The balance sheet above was prepared through the following steps

Step 1 : Identify the Accounts Affected by the transactions

Step 2: Classify the Accounts Affected in into Assets, Liabilities and Equity

Step 3: Record in the classified balance sheet