Question: The manager of Philly Automotive Inc prepared the company s balance

The manager of Philly Automotive, Inc., prepared the company’s balance sheet as of June 30, 2014, while the accountant was ill. The balance sheet contains numerous errors. In particular, the manager knew that the balance sheet should balance, so he plugged in the stockholders’ equity amount needed to achieve this balance. The stockholders’ equity amount is not correct. All other amounts are accurate.

1. Prepare the correct balance sheet and date it properly. Compute total assets, total liabilities, and stockholders’ equity.
2. Is Philly Automotive actually in better (or worse) financial position than the erroneous balance sheet reports? Give the reason for your answer.
3. Identify the accounts listed on the incorrect balance sheet that should not be reported on the balance sheet. State why you excluded them from the correct balance sheet you prepared for Requirement 1. On which financial statement should these accountsappear?
View Solution:

Sale on SolutionInn
  • CreatedJuly 25, 2014
  • Files Included
Post your question