(Learning Objectives 2, 4, 5: Preparing a balance sheet; applying the entity assumption; making business decisions) Sandy Healey is a realtor. She organized the business as a corporation on April 16, 20X7. The business received $95,000 cash from Healey and issued shares to Healey. Consider the following facts as of April 30, 20X7.

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. Offi ce supplies on hand at the real estate offi ce total $11,000.

e. Healey’s business owes $36,000 on a note payable for some land acquired for a total price of $110,000.

f. Healey’s business spent $24,000 for a Realty Universe franchise, which entitles her to represent herself as an agent. Realty Universe is a national affi liation 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 20X1 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, 20X7.

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.