Error analysis and preparation of balance sheet (Learning Objective 6)

20–25 min.

The IT manager of Baldwin Realty, Inc., prepared the balance sheet of the company while the accountant was ill. The balance sheet contains numerous errors. In particular, the IT manager knew that the balance sheet should balance, so she plugged in the retained earnings amount to achieve this balance. The retained earnings amount, however, is not correct. All other amounts are accurate, but some are out of place.

Requirement 1. Prepare a new, corrected balance sheet for Baldwin Realty, Inc.AppendixLO1

Transcribed Image Text:

Baldwin Realty, Inc. Balance Sheet Month Ended April 30, 2014 ASSETS LIABILITIES Cash Rent Expense Supplies Expense Salaries Payable Equipment $ 9,100 Accounts Payable $ 650 2,100 Utilities Expense 850 550 Accounts Receivable 2,300 1,800 Notes Payable 6,000 21,000 STOCKHOLDERS' EQUITY Common Stock 15,000 Supplies 700 Retained Earnings 9,050 Total Stockholders' Equity 24,750 Total Liabilities & Total Assets $34,550 Stockholders' Equity $34,550