Stockholders’ Equity Section of the Balance Sheet The newly hired accountant at Ives Inc. prepared the following balance sheet:

Required 1. Prepare a corrected balance sheet. Write a short explanation for each correction.
2. Why does the Retained Earnings account have a negative balance?

Transcribed Image Text:

Assets Cash Accounts receivable Treasury stock Plant, property, and equipment Retained earnings Total assets Liabilities Accounts payable Dividends payable Stockholders' Equity $ 3,500 5,000 500 108,000 1,000 $118,000 $ 5,500 1,500 Common stock, $1 par, 100,000 shares issued 100,000 Additional paid-in capital 11,000 Total liabilities and stockholders' equity $118,000