P1-57A. (Learning Objectives 3, 4: Using the accounting equation; preparing a Balance Sheet; making decisions) The manager
Question:
P1-57A. (Learning Objectives 3, 4: Using the accounting equation; preparing a Balance Sheet;
making decisions) The manager of Headlines, Inc., prepared the company’s Balance Sheet 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 shareholders’ equity amount needed to achieve this balance. The shareholders’ equity amount is not correct. All other amounts are accurate.
Requirements 1. Prepare the correct Balance Sheet and date it properly. Compute total assets, total liabilities, and shareholders’ equity.
2. Is Headlines actually in a better (or worse) financial position than the erroneous Balance Sheet reports? Give reasons 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 accounts appear?
Step by Step Answer:
Financial Accounting International Financial Reporting Standards Global Edition
ISBN: 9781292211145
11th Edition
Authors: Charles T. Horngren, C. William Thomas, Wendy M. Tietz, Themin Suwardy, Walter T. Harrison