Cullumber Corporation was formed on January 1, 2025. At December 31, 2025, Betty Harris, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows. Cullumber CorporationBalance SheetDecember 31, 2025 Assets Liabilities and Stockholders’ Equity Cash $22,000 Accounts payable $32,600 Accounts receivable 53,000 Notes payable 17,000 Inventory 38,000 Boat loan 21,400 Boat 25,000 Stockholders’ equity 67,000 Betty willingly admits that she is not an accountant by training. She is concerned that her balance sheet might not be correct. She has provided you with the following additional information. 1. The boat actually belongs to Betty, not to Cullumber Corporation. However, because she thinks she might take customers out on the boat occasionally, she decided to list it as an asset of the company. To be consistent, she also listed as a liability of the corporation her personal loan that she took out at the bank to buy the boat. 2. The inventory was originally purchased for $25,700, but due to a surge in demand Betty now thinks she could sell it for $38,000. She thought it would be best to record it at $38,000. 3. Included in the accounts receivable balance is $10,000 that Betty loaned to her brother 5 years ago. Betty included this in the receivables of Cullumber Corporation so she wouldn’t forget that her brother owes her money.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cullumber Corporation was formed on January 1, 2025. At December 31, 2025, Betty Harris, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows.

Cullumber Corporation Balance Sheet December 31, 2025
Assets	Liabilities and Stockholders’ Equity
Cash	$22,000	Accounts payable	$32,600
Accounts receivable	53,000	Notes payable	17,000
Inventory	38,000	Boat loan	21,400
Boat	25,000	Stockholders’ equity	67,000

Betty willingly admits that she is not an accountant by training. She is concerned that her balance sheet might not be correct. She has provided you with the following additional information.

1.		The boat actually belongs to Betty, not to Cullumber Corporation. However, because she thinks she might take customers out on the boat occasionally, she decided to list it as an asset of the company. To be consistent, she also listed as a liability of the corporation her personal loan that she took out at the bank to buy the boat.
2.		The inventory was originally purchased for $25,700, but due to a surge in demand Betty now thinks she could sell it for $38,000. She thought it would be best to record it at $38,000.
3.		Included in the accounts receivable balance is $10,000 that Betty loaned to her brother 5 years ago. Betty included this in the receivables of Cullumber Corporation so she wouldn’t forget that her brother owes her money.