The manager of Image Maker, Inc., prepared the companys balance sheet as of March 31, 2012, while
Question:
The manager of Image Maker, Inc., prepared the company’s balance sheet as of March 31, 2012, 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 Image Maker 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?
Step by Step Answer:
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom