Danielle Stone, the manager of Image Runner, Inc., prepared the company's balance sheet while the accountant was ill. The balance sheet contains some errors. In particular, Stone knew that the balance sheet should balance, so she plugged in the stockholders' equity amount needed to achieve this balance. The stockholders' equity amount is not correct. All other amounts are accurate.

Required
1. Prepare the correct balance sheet and date it properly. Compute total assets, total liabilities, and stockholders' equity.
2. Is Image Runner actually in better (or worse) financial position than the erroneous balance sheet reports? Give the reason for your answer. (Challenge)
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?

Transcribed Image Text:

Image Runner, Inc. Balance Sheet Month Ended October 31, 20X8 Assets Liabilities Cash Equipmemt Accounts payable Utilities expense Advertising expe Land Salary expense $9,100 36,700 3,000 2,100 300 80,500 3,300 Interest expense... Office suu Accounts receivable... Note payable Total 2,000 800 2,600 50,000 69,400 Stockholders' Equity Stockholders' equity-634600 Total liabilities $135,000 Total a ssets $135,000