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 stockholders equity amount needed to achieve this balance. The stockholders 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 stockholders equity.
2. Is Headlines actually in better (or worse) financial position than the erroneous balance sheet reports? Give the reason 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 accountsappear?

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Headlines, Inc. Balance Sheet For the Month Ended June 30, 2010 Assets Liabilities Equipment Accounts payable Utilities expense Advertising ex $ 8,000 39,500 5,000 1,700 500 77,000 4,000 Notes receivable Interest expense. Office supplies. Accounts receivable S 13,000 1,800 1,000 2,600 ... Note payabl.55,500 Total 73,900 Salary expense.. Stockholders' Equity Stockholders' equity61,80 Total asse $135,700