GG Corporation, a private corporation, was formed on July 1, 2018. On July 31, Guy Glinas, the

GG Corporation, a private corporation, was formed on July 1, 2018. On July 31, Guy Gélinas, the company's president, prepared the following statement of financial position:

Guy admits that his knowledge of accounting is somewhat limited and is concerned that his statement of financial position might not be correct. He gives you the following additional information:
1. The boat actually belongs to Guy Gélinas, not to GG Corporation. However, because Guy thinks he might take customers out on the boat occasionally, he decided to list it as an asset of the company. To be consistent, he also included as a liability of the company the personal bank loan that he took out to buy the boat.
2. Included in the accounts receivable balance is $10,000 that Guy personally loaned to his brother five years ago. Guy included this in the receivables of GG Corporation so that he wouldn't forget that his brother owes him money.
3. Guy's statements didn't balance originally. To make them balance, he adjusted the Common Shares account until assets equalled liabilities and shareholders' equity.
Instructions
(a) Identify any corrections that should be made to the statement of financial position and explain why.
(b) Prepare a corrected statement of financial position. (Hint: To get the balance sheet to balance, adjust Common Shares.)
(c) What other financial statements should GG Corporation prepare, assuming it follows Accounting Standards for Private Enterprises?

Transcribed Image Text:

GG CORPORATION Statement of Financial Position July 31, 2018 Liabilities and Shareholders' Equity 34,000 40,000 50,000 6.000 $130,00o Assets Cash $20,000 Accounts payable Accounts receivable 50,00o Boat loan payable Merchandise inventory36,000 Common shares Boat 24.000 Retained earnings $130,00o