Diane Wynne is the bookkeeper for Bates Company, Inc. Diane has been trying to get the company's balance sheet to balance. She finally got it to balance, but she still isn't sure that it is correct.

Instructions
Explain to Diane Wynne in a memo (a) The purpose of a balance sheet, and (b) Why this balance sheet is incorrect and what she should do to correctit.

Transcribed Image Text:

BATES COMPANY, ING Balance Sheet For the Month Ended December 31, 2010 Liabilities and Stockholders' Equity Common stock Accounts receivable Dividends Notes payable Retained earnings Total liabilities and Assets Equipment Cash Supplies Accounts payable Total assets $20,500 10,500 2,000 5.000) $28,000 12,000 (6,000) (2,000) 14,000 10,000 stockholders equity $28,000