Question

Jose Alvarado is a realtor. He organized the business as a corporation on April 16, 2015. The business received $60,000 cash from Alvarado and issued common stock. Consider the following facts as of April 30, 2015:
a. Alvarado has $18,000 in his personal bank account and $43,000 in the business bank account.
b. Alvarado owes $7,500 on a personal charge account with Sears.
c. Alvarado acquired business furniture for $19,800 on April 24. Of this amount, the business owes $15,000 on accounts payable at April 30.
d. Office supplies on hand at the real estate office total $2,000.
e. Alvarado’s business owes $128,000 on a note payable for some land acquired for a total price of $150,000.
f. Alvarado’s business spent $16,000 for a USA Realty franchise, which entitles him to represent himself as an agent. USA Realty is a national affiliation of independent real estate agents. This franchise is a business asset.
g. Alvarado owes $197,000 on a personal mortgage on his personal residence, which he acquired in 2009 for a total price of $361,000.

Requirements
1. Prepare the balance sheet of the real estate business of Jose Alvarado Realtor, Inc., at April 30, 2015.
2. Does it appear that the realty business can pay its debts? How can you tell?
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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  • CreatedJuly 25, 2014
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