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The following balance sheet has been prepared, and when you look at it you again see an error.
Balance Sheet
December 31
Assets
Cash $50,000
Accounts receivable 20,000
Equipment $250,000
Total assets $320,000
Liabilities
Accounts payable $60,000
Salaries payable 25,000
Interest payable 30,000
Notes payable 110,000
Unearned revenue 20,000
Total liabilities $245,000
Owner's equity
Total owner's equity $25,000
Total liabilities and equity $320,000
Problem a. What error was made when preparing this balance sheet?
Problem b. What should be done to correct this error?
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