A classified balance sheet shows a company’s asset, liability, and stockholders’ equity accounts with a distinction made between current and noncurrent assets as well as current and noncurrent liabilities.
Here’s how to prepare a classified balance sheet from an adjusted trial balance:
(1) identify the balance sheet accounts
(2) classify each balance sheet account as a current asset, noncurrent asset, current liability, noncurrent liability, or stockholders’ equity account
(3) calculate the ending balance of retained earnings
The ending balance of retained earnings is calculated as follows:
retained earnings, beginning balance
plus: net income (or minus net loss)
minus: dividends
equals: retained earnings, ending balance
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