(Subsequent Events) Your firm has been engaged to examine the financial statements of Sabrina Corporation for the year 2008. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2002. The client provides you with the information below.

The supplementary information below is also provided.

Instructions Analyze the above information to prepare a corrected balance sheet for Sabrina in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared.
The books are closed and adjustments to income are to be made through retained earnings.

Transcribed Image Text:

SABRINA CORPORATION BALANCE SHEET AS OF DECEMBER 31, 2008 Assets Current assets Other assets $1,881,100 5,171,400 Current liabilities Long-term liabilities Capital $7,052,500 Liabilities $ 962,400 1,439,500 4,650,600 $7,052,500 An analysis of current assets discloses the following. Cash (restricted in the amount of $400,000 for plant expansion) Investments in land Accounts receivable less allowance of $30,000 Inventories (LIFO flow assumption) Other assets include: Prepaid expenses Plant and equipment less accumulated depreciation of $1,430,000 Cash surrender value of life insurance policy Unamortized bond discount Notes receivable (short-term) Goodwill Land $ 571,000 185,000 480,000 645,100 $1,881,100 $ 47,400 4,130,000 84,000 49,500 162,300 252,000 446,200 $5,171,400