After you have been out of college for a year, you have $5,000 to invest. A friend has started My Dream Inc., and she asks you to invest in her company. You obtain My Dream Inc.'s financial statements, which are summarized at the end of the first year as follows:

Visits with your friend turn up the following facts:
a. The company owes an additional $10,000 for TV ads that was incurred in December but not recorded in the books.
b. Software costs of $20,000 were recorded as assets. These costs should have been expensed. My Dream paid cash for these expenses and recorded the cash payment correctly.
c. Revenues and receivables of $10,000 were overlooked and omitted.
Requirements
1. Prepare corrected financial statements.
2. Use your corrected statements to evaluate My Dream's results of operations and financial position.
3. Will you invest in My Dream? Give your reason.

Transcribed Image Text:

My Dream Inc. Income Statement For the Year Ended December 31, 2014 $80,000 60,000 Expenses My Dream Inc. Balance Sheet As at December 31, 2014 S13,000 Liabies. 67,000 Equity $35,000 45,000 $80,000 Cash Total assets 80,000 Total liabilities and equity.. $0,0)