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

Prepare a multiple-step income statement, The Caltor Company gathered the f...

The Caltor Company gathered the following condensed data for the Year Ended December 31, 2010. Cost of goods sold $ 710,000 Net sales 1,279,000 Administrative expenses 239,000 I

Public debt, effects of public debt on production, d

effects of public debt on production, d

Liquidation, The liquidation of the Marks, Norris, Smith, and Savannah part...

The liquidation of the Marks, Norris, Smith, and Savannah partnership:

Determine annual operating cash flow, A 4 year project has an initial asset...

A 4 year project has an initial asset investment of 306600, and initial net working capital investment of 29200, and an annual operating cash flow of -46720. The fixed asset is ful

Fair market value, Stepped Up Basis -Usually, the foundation of property ac...

Stepped Up Basis -Usually, the foundation of property acquired by INHERITENCE, BEQUEST or device from a DECENDANT is the FAIR MARKET VALUE of the property on the date of decendant'

Retained Earnings and Capital, What happens to capital when a project is co...

What happens to capital when a project is completely funded by retained earnings?

Frog, why frog respire through skin

why frog respire through skin

Explain the mechanism, Explain the mechanism that states use to prevent the...

Explain the mechanism that states use to prevent the double taxation of the income of a corporation doing business in two or more states.

Greek Debt Exchange, Greek Debt Exchange On the evening of February 20, 201...

Greek Debt Exchange On the evening of February 20, 2012 private institutional investors, representatives of the IMF, ECB, and European governments agreed to a major "intervention"

Explain how firms may use their capital structure, Following the lines of t...

Following the lines of the model by Ross (1977): I. Explain how firms may use their capital structure to generate a signal that conveys credible information about their future

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