Problem 1-37 introduced Jason Chan and his pizza business. At the end of November, the following items were in his records:
Supply of ingredients………………………………. $ 670
Wages owed to employees…………………………. 1,460
Loan owed to the bank……………………………...11,000
Cash held in a chequing account……………………. 3,490
Cost of ovens and refrigerators………………………14,300
Prepaid rent for December………………………….. 1,200
Common shares……………………………………… 5,000
Retained earnings……………………………………. 2,200
Required:
a. Identify each of the items in his records as an asset, liability, or shareholders' equity item.
b. Prepare a balance sheet for the end of November.
c. Jason Chan does not have accounts receivable in his records. Explain why it is unlikely that he will have an account called accounts receivable. Under what business circumstances would it be necessary for him to have such an account?