Barbara Boland opened a flower shop. Business has been good, and Boland is considering expanding with a
Question:
In these financial statements, all amounts are correct except for Owners' Equity. Boland's cousin heard that total assets should equal total liabilities plus owners' equity, so he plugged in the amount of owners' equity at $43,000 to make the balance sheet come out evenly.
Requirements
Barbara Boland has asked whether she should expand the business. Her banker says Boland may be wise to expand if (a) net income for the first quarter reaches $5,000 and (b) total assets are at least $25,000. It appears that the business has reached these milestones, but Boland doubts her cousin's understanding of accounting. Boland needs your help in making this decision. Prepare a corrected income statement and balance sheet. (Remember that Retained Earnings, which was omitted from the balance sheet, should equal net income for the period; there were no dividends.) After preparing the statements, give Boland your recommendation as to whether she should expand the flower shop.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Financial Accounting
ISBN: 978-0133472264
5th Canadian edition
Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin