Stockholders Equity Section of the Balance Sheet The newly hired accountant at Ives Inc. prepared the following

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Stockholders’ Equity Section of the Balance Sheet The newly hired accountant at Ives Inc. prepared the following balance sheet:
Assets
Cash .....................$ 3,500
Accounts receivable ...............5,000
Treasury stock ....................500
Plant, property, and equipment ...........108,000
Retained earnings ..................1,000
Total assets ...................$118,000
Liabilities
Accounts payable ...............$ 5,500
Dividends payable .................1,500
Stockholders’ Equity
Common stock, $1 par, 100,000 shares issued .....100,000
Additional paid-in capital ............11,000
Total liabilities and stockholders’ equity .....$118,000

Required
1. Prepare a corrected balance sheet. Write a short explanation for each correction.
2. Why does the Retained Earnings account have a negative balance?

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...
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