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Question 2 Skysong, Inc. was formed on January 1, 2017. At December 31, 2017, Miko Liu, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows. Skysong, Inc. Balance Sheet December 31, 2017 Liabilities and Stockholders' Assets Equity Cash $22,000 Accounts payable $33,000 Accounts receivable 55,000 Notes payable 16,500 Inventory 39,600 Boat loan 24,200 Boat 26,400 Stockholders' equity 70,400 Miko 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 Miko, not to Skysong, Inc.. 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 $27,500, but due to a surge in demand Miko now thinks she could sell it for $39,600. She thought it would be best to record it at $39,600. 3. Included in the accounts receivable balance is $11,000 that Miko loaned to her brother 5 years ago. Miko included this in the receivables of Skysong, Inc. so she wouldn't forget that her brother owes her money. (b) Provide a corrected balance sheet for Skysong, Inc.. (Hint: To get the balance sheet to balance, adjust stockholders' equity.) (List assets in order of liquidity.) Skysong, Inc. Balance Sheet

Question 2 Skysong, Inc. was formed on January 1, 2017. At December 31, 2017, Miko Liu, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows. Skysong, Inc. Balance Sheet December 31, 2017 Liabilities and Stockholders' Assets Equity Cash $22,000 Accounts payable $33,000 Accounts receivable 55,000 Notes payable 16,500 Inventory 39,600 Boat loan 24,200 Boat 26,400 Stockholders' equity 70,400 Miko 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 Miko, not to Skysong, Inc.. 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 $27,500, but due to a surge in demand Miko now thinks she could sell it for $39,600. She thought it would be best to record it at $39,600. 3. Included in the accounts receivable balance is $11,000 that Miko loaned to her brother 5 years ago. Miko included this in the receivables of Skysong, Inc. so she wouldn't forget that her brother owes her money. (b) Provide a corrected balance sheet for Skysong, Inc.. (Hint: To get the balance sheet to balance, adjust stockholders' equity.) (List assets in order of liquidity.) Skysong, Inc. Balance Sheet

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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Question 2 Skysong, Inc. was formed on January 1, 2017. At December 31, 2017, Miko Liu, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows. Skysong, Inc. Balance Sheet December 31, 2017 Liabilities and Stockholders' Assets Equity Cash $22,000 Accounts payable $33,000 Accounts receivable 55,000 Notes payable 16,500 Inventory 39,600 Boat loan 24,200 Boat 26,400 Stockholders' equity 70,400 Miko 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 Miko, not to Skysong, Inc.. 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 $27,500, but due to a surge in demand Miko now thinks she could sell it for $39,600. She thought it would be best to record it at $39,600. 3. Included in the accounts receivable balance is $11,000 that Miko loaned to her brother 5 years ago. Miko included this in the receivables of Skysong, Inc. so she wouldn't forget that her brother owes her money. (b) Provide a corrected balance sheet for Skysong, Inc.. (Hint: To get the balance sheet to balance, adjust stockholders' equity.) (List assets in order of liquidity.) Skysong, Inc. Balance Sheet
Transcribed Image Text:Question 2 Skysong, Inc. was formed on January 1, 2017. At December 31, 2017, Miko Liu, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows. Skysong, Inc. Balance Sheet December 31, 2017 Liabilities and Stockholders' Assets Equity Cash $22,000 Accounts payable $33,000 Accounts receivable 55,000 Notes payable 16,500 Inventory 39,600 Boat loan 24,200 Boat 26,400 Stockholders' equity 70,400 Miko 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 Miko, not to Skysong, Inc.. 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 $27,500, but due to a surge in demand Miko now thinks she could sell it for $39,600. She thought it would be best to record it at $39,600. 3. Included in the accounts receivable balance is $11,000 that Miko loaned to her brother 5 years ago. Miko included this in the receivables of Skysong, Inc. so she wouldn't forget that her brother owes her money. (b) Provide a corrected balance sheet for Skysong, Inc.. (Hint: To get the balance sheet to balance, adjust stockholders' equity.) (List assets in order of liquidity.) Skysong, Inc. Balance Sheet
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