The bookkeeper of Martz Auction Co. prepared the balance sheet of the company while the accountant was
Question:
The bookkeeper of Martz Auction Co. prepared the balance sheet of the company while the accountant was ill. The balance sheet contains numerous errors. In particular, the bookkeeper knew that the balance sheet should balance so he plugged in the owner’s equity amount needed to achieve this balance. The owner’s equity amount however is not correct. All other amounts are accurate
MARTZ AUCTION Co. BALANCE SHEET MONTH ENDED JULY, 31, 19X3
ASSETS LIABILITIES
Cash 3,000 Accounting receivable 3,000
Office supplies 1,000 Service Revenue 9,000
Land 44,000 Property tax expense 800
Advertising Expense 2,500 Account payable 9,000
Office furniture 10,000 Owner’s Equity
Note Payable 16,000 Owner’s Equity 8,700
Rent expense 4,000
Total Assets 80,500 Total Liabilities 80,500
Required
1 Prepared the correct balance sheet and dates it correctly. Compute total assets, total liabilities and owner’s equity
2 Identify the accounts listed above that should be presented on the balance sheet and state why you excluded them from the correct balance sheet you prepared for requirement 1