only a arranged satisfa and asset valuation. Joe STAR SCRIPTS BALANCE SHEET NOVEMBER 30, 2015 Liabilities & Owner's Equity $ 5,000 4,000 3,000 Liabilities: Notes Payable...... Accounts Payable.... Assets Notes Receivable..... Accounts Receivable. $ 65,000 32,000 $ 97,000 Cash.... 60,000 Total Liabilities. Owner's Equity: Capital Stock . Retained Earnings...... 75,000 Land........... Building Office Furniture...... Other Assets........ Total ..... 9,600 ...... 10,000 25,000 $181,600 Total.. 74,600 $181.600 In discussion with Joe and by inspection of the accounting records, you discover the following facts: 1. The amount of cash, $5,000, includes $2,000 in the company's bank account, S1,200 on hand in the company's safe, and S1,800 in Joe's personal savings account. 2. One of the notes receivable in the amount of $600 is an 1OU that Joe received in a poker game five years ago. The 1OU is signed by "G,W.," whom Joe met at the game but has not heard from since. . eice furniture includes $2,500 for an Indian rug for the office purchased on November 15. Ouee l cost of the rug was $10,000. The business paid $2,500 in cash and issued a note The le to Jana Interiors for the balance due ($7,500). 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 $s00 but is not on hand because Joe donated it to a local charity. S. The "Other Assets" of $25,000 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 unconstitu- tional, 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 $15,000 but was increased to a valuation of S60,000 when one of Joe's friends offered to pay that much for it if Joe would move the building off the lot. 7. The accounts payable include business debts of $30,000 and the $2,000 balance owed on Joe's personal MasterCard. Instructions a. Prepare a corrected balance sheet at November 30, 2015. 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.