P1-70B. (Learning Objectives 2, 3, 4: Apply underlying accounting concepts; evaluatebusiness operations; construct a balance sheet) Hudson Alvarez is a realtor. He organizedhis business as a corporation on June 16, 2019. The business received $75,000 from Alvarezand issued common stock. Consider these facts as of June 30, 2019.a. Alvarez has $17,000 in his personal bank account and $44,000 in the business bankaccount.b. Alvarez owes $6,500 on a personal charge account with a local department store.c. Alvarez acquired business furniture for $17,600 on June 24. Of this amount, the business owes $9,000 on accounts payable at June 30.d. Office supplies on hand at the real estate office total $4,000.e. Alvarez’s business owes $102,000 on a note payable for some land acquired for a totalprice of $162,000.f. Alvarez’s business spent $16,000 for a Realty Experience franchise, which entitles himto represent himself as an agent. Realty Experience is a national affiliation of independent real estate agents. This franchise is a business asset.g. Alvarez owes $179,000 on a personal mortgage on his personal residence, which heacquired in 2014 for a total price of $419,000.Requirements1. Prepare the balance sheet of the real estate business of Hudson Alvarez Realtor, Inc., atJune 30, 2019.2. Does it appear that the realty business can pay its debts? How can you tell?3. Identify the personal items given in the preceding facts that should not be reported on thebalance sheet of the business.
P1-70B. (Learning Objectives 2, 3, 4: Apply underlying accounting concepts; evaluate
business operations; construct a
his business as a corporation on June 16, 2019. The business received $75,000 from Alvarez
and issued common stock. Consider these facts as of June 30, 2019.
a. Alvarez has $17,000 in his personal bank account and $44,000 in the business bank
account.
b. Alvarez owes $6,500 on a personal charge account with a local department store.
c. Alvarez acquired business furniture for $17,600 on June 24. Of this amount, the business owes $9,000 on accounts payable at June 30.
d. Office supplies on hand at the real estate office total $4,000.
e. Alvarez’s business owes $102,000 on a note payable for some land acquired for a total
price of $162,000.
f. Alvarez’s business spent $16,000 for a Realty Experience franchise, which entitles him
to represent himself as an agent. Realty Experience is a national affiliation of independent real estate agents. This franchise is a business asset.
g. Alvarez owes $179,000 on a personal mortgage on his personal residence, which he
acquired in 2014 for a total price of $419,000.
Requirements
1. Prepare the balance sheet of the real estate business of Hudson Alvarez Realtor, Inc., at
June 30, 2019.
2. Does it appear that the realty business can pay its debts? How can you tell?
3. Identify the personal items given in the preceding facts that should not be reported on the
balance sheet of the business.
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