Bruce Smith is an intern for the Start Company. He knows the company's balance sheet is supposed to balance, but he is not having much luck getting it to balance. Bruce knows that you are taking a course in accounting so he asks for your help. Bruce provides you with the following balance sheet that is currently out of balance:

In addition, Bruce provides you with a correct income statement that reports a net income for 2019 of \(\$ 28,000\).

Required

a. Prepare a corrected balance sheet for the Start Company.

b. Write a memo to Bruce explaining what he did wrong.

c. In the memo explain the purpose of the balance sheet.

Transcribed Image Text:

Cash...... Accounts receivable. START COMPANY Balance Sheet December 31, 2019 Assets Liabilities 15,000 Inventory... 20,000 30,000 Notes payable.. 34,000 28,000 Stockholders' Equity (22,000) Dividends..... (11,000) Common stock. 10,000 Retained earnings, beginning of year. 10,000 51,000 Total. 67,000 Equipment, net.... Accounts payable. Total