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

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

AppendixLO1