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?