Sandy Healey is a realtor. She organized the business as a corporation on April 16, 2011. The

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Sandy Healey is a realtor. She organized the business as a corporation on April 16, 2011. The business received $95,000 cash from Healey and issued common stock. Consider the following facts as of April 30, 2011.
a. Healey has $16,000 in her personal bank account and $71,000 in the business bank account.
b. Healey owes $1,000 on a personal charge account with The Loft.
c. Healey acquired business furniture for $41,000 on April 25. Of this amount, the business owes $33,000 on accounts payable at April 30.
d. Office supplies on hand at the real estate office total $11,000.
e. Healeys business owes $36,000 on a note payable for some land acquired for a total price of $110,000.
f. Healeys business spent $24,000 for a Realty Universe franchise, which entitles her to represent herself as an agent. Realty Universe is a national affiliation of independent real estate agents. This franchise is a business asset.
g. Healey owes $140,000 on a personal mortgage on her personal residence, which she acquired in 2003 for a total price of $340,000.

Requirements
1. Prepare the balance sheet of the real estate business of Sandy Healey Realtor, Inc., at April 30, 2011.
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.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Financial accounting

ISBN: 978-0136108863

8th Edition

Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas

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