P1-65B. (Learning Objectives 2, 4: Preparing a Balance Sheet; applying the entity assumption;

making business decisions) Jeana Hart is a realtor. She organized her business as a corporation on September 16, 20X7. The business received €80,000 from Hart and issued shares to Hart. Consider these facts as of September 30, 20X7.

a. Hart has €11,000 in her personal bank account and €31,000 in the business bank account.

b. Hart owes €1,000 on a personal charge account with a department store.

c. Hart acquired business furniture for €40,000 on September 25. Of this amount, the business owes €30,000 on accounts payable at September 30.

d. Office supplies on hand at the real estate office total €5,000.

e. Hart’s business owes €35,000 on a note payable for some land acquired for a total price of €115,000.

f. Hart’s business spent €28,000 for a Realty Region franchise, which entitles her to represent herself as an agent. Realty Region is a national affiliation of independent real estate agents. This franchise is a business asset.

g. Hart owes €141,000 in mortgage on her personal residence, which she acquired in 20X1 for a total price of €375,000.

Requirements 1. Prepare the Balance Sheet of the real estate business of Jeana Hart Realtor, Inc., at September 30, 20X7.

2. Does it appear that the realty business can pay its debts? How can you tell?

3. Identify the personal items given in the preceding facts that should not be reported on the Balance Sheet of the business.