prepare a revised balance sheet, Financial Accounting

Assignment Help:
#questionBroadway Scripts is a service-type enterprise in the entertainment field, and its manager, Joe Numbers, has only a limited knowledge of accounting. Joe prepared the following balance sheet, which, although arranged satisfactorily, contains certain errors with respect to such concepts as the business equity and the asset valuation. Joe owns all of the corporation’s outstanding stock.

BROADWAY SCRIPTS
Balance Sheet
November 30, 2002
Assets Liabilities & Owner’s Equity
Cash $ 4,100 Liabilities:
Notes Receivable 3,000 Notes Payable $ 70,000
Accounts Receivable 2,740 Accounts Payable 36,210
Land 80,000 Total Liabilities $106,210
Building 61,850 Owner’s Equity:
Office Furniture 9,220 Capital Stock 10,000
Other Assets 24,000 Retained Earnings 68,700
Total $184,910 Total $184,910

In discussion with Joe and by inspection of the accounting records, you discover the following facts:
1. The amount of cash, $4,100, includes $3,000 in the company’s bank account, $520 on hand in the company’s safe, and $580 in Joe’s personal savings account.
2. One of the notes receivable in the amount of $750 is an IOU that Joe received in a poker game several years ago. The IOU is signed by “J.R.,” whom Joe met at the game but has not heard from since.
3. Office furniture includes $3,000 for a Persian rug for the office purchased on November 25. The total cost of the rug was $10,000. The business paid $2,900 in cash and issued a note payable to Mohair Carpet for the balance due ($7,000). As no payment on the note is due until January, this debt is not included in the liabilities above.
4. Also included in the amount for office furniture is a computer that cost $1,200 but is not on hand because Joe donated it to a local charity.
5. The “Other Assets” of $24,000 represent the total amount of income taxes Joe has paid the federal government over a period of years. Joe believes the income tax law to be unconstitutional, and a friend who attends law school has promised to help Joe recover the taxes paid as soon as he passes the bar exam.
6. The asset “Land” was acquired at a cost of $25,000 but was increased to a valuation of $60,000 when a friend of Joe offered to pay that much for it if Joe would move the building off the lot.
7. The accounts payable include business debts of $31,400 and the $4,810 balance owed on Joe’s personal MasterCard.



Instructions
a. Prepare a corrected balance sheet at November 30, 2002.
b. For each of the seven numbered items above, use a separate numbered paragraph to explain whether the treatment followed by Joe is in accordance with generally accepted accounting principles.
.

Related Discussions:- prepare a revised balance sheet

Determine the features of accounting information system, Determine the Feat...

Determine the Features of Accounting information system Accounting information system must have certain features which are common to all valid information systems within a bus

Investment with cum.div. quotation-executorship laws, Investment with cum.d...

Investment with cum.div. Quotation Investment with cum.div. Quotation will be debited to the investment account at its full value. When the dividend is subsequently received it

AFM, I need help with assignment completeion

I need help with assignment completeion

Calculate the possible price ranges for stock, Purchase price $2.15 Exer...

Purchase price $2.15 Exercised Price: $37.50 Currently Trading at $37.00 In order to make the decision on the best course of action, two tables of calculations are needed:

Draw budget constraint for cooking oil and flour, 1. You can buy any quanti...

1. You can buy any quantity of cooking oil at $5 per litre and any quantity of flour at $2 per kilo. You have allocated $20 to spend on cooking oil and flour.    (a) If you choo

Evaluate break-even production units, Q. Evaluate Break-Even Production uni...

Q. Evaluate Break-Even Production units? R.S. Manufacturing Ltd. Budgets production of 3,00,000 units at cost of Rs.10 each. The Fixed costs are Rs.20, 00,000. The selling pric

Incremental cash flows, You are an analyst in the corporate finance departm...

You are an analyst in the corporate finance department of Pet Products, Inc. You have been asked to analyze a potential new product to be introduced. The beef-flavored water will b

Assets-balance sheet-trusts laws and accounts, Assets   1) The classificat...

Assets   1) The classification of investments in the Balance Sheet will be under a few broad headings with schedules listing the individual assets. Where the Trustees Act has been

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd