Chapter 1, Problem 1.64AP

LO 2, 3, 4

(Learning Objectives 2, 3, 4: Apply underlying accounting concepts; evaluate business operations; construct a balance sheet) Brandon Hilton is a realtor. He organized his business as a corporation on June 16, 2019. The business received $65,000 cash from Hilton and issued common stock. Consider the following facts as of June 30, 2019:

1. a. Hilton has $15,000 in his personal bank account and $55,000 in the business bank account.
2. b. Hilton owes $3,400 on a personal charge account at a local department store.
3. c. Hilton acquired business furniture for $30,000 on June 24. Of this amount, the business owes $16,000 on accounts payable at June 30.
4. d. Office supplies on hand at the real estate office total $8,000.
5. e. Hilton’s business owes $112,000 on a note payable for some land acquired for a total price of $165,000.
6. f. Hilton’s business spent $20,000 for a Realty Universe franchise, which entitles him to represent himself as an agent. Really Universe is a national affiliation of independent real estate agents. This franchise is a business asset.
7. g. Hilton owes $182,000 on a personal mortgage on his personal residence, which he acquired in 2014 for a total price of $334,000.

Requirements

1. 1. Prepare the balance sheet of the real estate business of Brandon Hilton Realtor, Inc., at June 30, 2019.
2. 2. Does it appear that the realty business can pay its debts? How can you tell?
3. 3. Identify the personal items given in the preceding facts that should not be reported on the balance sheet of the business.