Lori Milner is the bookkeeper for Philco Company, Inc. Lori has been trying to get the companys

Lori Milner is the bookkeeper for Philco Company, Inc. Lori 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 Lori Milner 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:

PHILCO COMPANY INC. Balance Sheet For the Month Ended December 31, 2014 Assets bili d Stockholders' Equipment Cash Supplies Accounts payable Total assets $18,000 9,000 1,000 (4,000) $24,000 Common stock Accounts receivable Dividends Notes payable Retained earnings Total liabilities and $12,000 (6,000) (2,000) 10,000 10,000 stockholders' equity $24,000