Heather Hutchison is a realtor. She organized the business as a corporation on March 10, 2008. The

Question:

Heather Hutchison is a realtor. She organized the business as a corporation on March 10, 2008. The business received $50,000 cash from Hutchison and issued common stock. Consider the following facts as of March 31, 2008:

a. Hutchison has $9,000 in her personal bank account and $16,000 in the business bank account.

b. Office supplies on hand at the real estate office total $1,000.

c. Hutchison's business spent $35,000 for a Keller Williams franchise, which entitles her to represent herself as an agent. Keller Williams is a national affiliation of independent real estate agents. This franchise is a business asset.

d. Hutchison's business owes $33,000 on a note payable for some land acquired for a total price of $100,000.

e. Hutchison owes $65,000 on a personal mortgage on her personal residence, which she acquired in 2002 for a total price of $190,000.

f. Hutchison owes $300 on a personal charge account with Sears.

g. Hutchison acquired business furniture for $18,000 on March 26. Of this amount, Hutchison's business owes $6,000 on accounts payable at March 31.

Required

1. Prepare the balance sheet of the real estate business of Heather Hutchison, Realtor, Inc., at March 31, 2008.

2. Does it appear that Hutchison's business can pay its debts? How can you tell? (Challenge)

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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