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FINANCIAL ACCOUNTING
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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Sadie Hawkins owns The Education Supply Center, a small store that sells educational supplies. Hawkins recently approached the local bank for a loan to finance a planned expansion of her store. Hawkins prepared the balance sheet shown below and submitted it to one of the bank's loan officers in support of her loan application. The Education Supply Center Balance Sheet December 31, 20X1 Assets Cash Accounts Receivable Inventory Equipment (cost) Personal Residence Supplies Family Auto Total Assets Liabilities and Owner's Equity Accounts Payable Note Payable on Family Car Mortgage on House Sadie Hawkins, Capital Total Liabilities and Owner's Equity $ 15,100 15,300 39,300 26,500 191,000 1,990 23,000 $312, 190 $ 15,750 11,300 95,000 190, 140 $312, 190 The following additional information was made available by Hawkins: a. The inventory has an original cost of $31,200. It is listed on the balance sheet at the estimated selling price. b. The cash listed on the balance sheet includes $2,850 in Sadie Hawkins' personal account. The remainder of the cash is in the store's account. c. The store recently purchased a delivery truck for $30,500, financed through a bank loan. The bank has legal title to the truck. To date the store has paid $9,300 on the loan. Of the remaining $21,200 liability, $8,900 is current and the remainder long-term. Hawkins did not include the truck or the liability on the balance sheet because neither she nor the business owns it. d. Depreciation allowable to date is $5,300 on the equipment and $3,300 on the truck. Required: 2. Prepare a corrected balance sheet in accordance with generally accepted accounting principles ENTER
Transcribed Image Text:Sadie Hawkins owns The Education Supply Center, a small store that sells educational supplies. Hawkins recently approached the local bank for a loan to finance a planned expansion of her store. Hawkins prepared the balance sheet shown below and submitted it to one of the bank's loan officers in support of her loan application. The Education Supply Center Balance Sheet December 31, 20X1 Assets Cash Accounts Receivable Inventory Equipment (cost) Personal Residence Supplies Family Auto Total Assets Liabilities and Owner's Equity Accounts Payable Note Payable on Family Car Mortgage on House Sadie Hawkins, Capital Total Liabilities and Owner's Equity $ 15,100 15,300 39,300 26,500 191,000 1,990 23,000 $312, 190 $ 15,750 11,300 95,000 190, 140 $312, 190 The following additional information was made available by Hawkins: a. The inventory has an original cost of $31,200. It is listed on the balance sheet at the estimated selling price. b. The cash listed on the balance sheet includes $2,850 in Sadie Hawkins' personal account. The remainder of the cash is in the store's account. c. The store recently purchased a delivery truck for $30,500, financed through a bank loan. The bank has legal title to the truck. To date the store has paid $9,300 on the loan. Of the remaining $21,200 liability, $8,900 is current and the remainder long-term. Hawkins did not include the truck or the liability on the balance sheet because neither she nor the business owns it. d. Depreciation allowable to date is $5,300 on the equipment and $3,300 on the truck. Required: 2. Prepare a corrected balance sheet in accordance with generally accepted accounting principles ENTER
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