Erin Chan is the proprietor of a property management company near the campus of a local university.

Question:

Erin Chan is the proprietor of a property management company near the campus of a local university. The business has cash of $12,000 and furniture that cost $24,000 and has a market value of $30,000. Debts include of $10,000. Chan's personal home is valued at $400,000 and her personal bank account contains $12,000.
1. Consider the accounting concepts and principles discussed in the chapter, and identify the principle that best matches each of the following situations:
a. Chan's personal assets are not recorded on the property management company's balance sheet.
b. Chan records furniture at its cost of $24,000, not the market value of $30,000.
c. Chan does not make adjustments for inflation.
d. The account payable of $10,000 is documented by a statement from the furniture company showing the property management company still owes $10,000 on the furniture. Chan's friend thinks the property management company should only owe about $6,000.
The account payable is recorded at $10,000.
2. How much is the owner's equity of the property management company?
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...