The bookkeeper of Lone Star Landscaping, Inc., prepared the company’s balance sheet while the accountant was ill. The balance sheet contains numerous errors. In particular, the bookkeeper knew that the balance sheet should balance, so he plugged in the stockholders’ equity amount needed to achieve this balance. The stockholders’ equity is incorrect. All other amounts are right, but some are out of place.

Requirements 

1. Prepare a corrected balance sheet.
2. Consider the original balance sheet as presented and the corrected balance sheet you prepared for requirement. Did total assets as presented in your corrected balance sheet increase, decrease, or stay the same from the original balance sheet? Why?

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LONE STAR LANDSCAPING, INC. Balance Sheet Month Ended May 31, 2007 Assets Liabilities Cash 5,500 Accounts receivable $ 2,500 Office supplies 900 Common stock 12,000 Land 35,300 Service revenue 39,300 Salary expense 2,700 Property tax expense 1,600 Office furniture 6,200 Accounts payable 2,300 Note payable 22,800 Rent expense 400 Stockholders' Equity Retained earnings 16,100 Total assets $ 73,800 Total liabilities $ 73,800