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

20–25 min.

The IT manager of On Call 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 On Call Realty, Inc.AppendixLO1

Transcribed Image Text:

On Call Realty, Inc. Balance Sheet Month Ended November 30, 2014 ASSETS LIABILITIES Cash $31,000 Accounts Payable $ 2,500 Rent Expense 1,800 Utilities Expense 900 Supplies Expense 500 Accounts Receivable 3,200 Salaries Payable 1,100 Notes Payable 7,000 Equipment 8,100 STOCKHOLDERS' EQUITY Common Stock 10,000 Supplies 580 Retained Earnings 18,320 Total Stockholders' Equity 28,900 Total Liabilities & Total Assets $42,500 Stockholders' Equity $42,500