You and your friend have been studying for the final exam. They are very uncertain about the structure of the balance sheet and shows you a practice balance sheet, provided below. They could not get the balance sheet to balance. You are told that the retained earnings amount was changed to make the assets equal the liabilities plus equity BUT you both know the retained earnings number is WRONG! You see right away that there are several errors on the statement. Because you are good friends, you decide to produce a balance sheet in good form using the correct format AND with the correct retained earnings amount.

Balance Sheet Year ending December 31, 2021 ASSETS Cash 6,520 Office supplies 1,045 Prepaid insurance 800 Inventory 2,750 Accounts receivable 3,525 Prepaid rent 650 Deferred revenue 1,280 Equipment 65,350 TOTAL ASSETS 81,920

LIABILITIES AND EQUITY Interest payable 1,250 Salaries payable 2,500 Accumulated depreciation 12,570 Note payable (due in 2022) 18,000 Accounts payable 1,455 Income tax payable 950 Dividends (3,000) Retained earnings (INCORRECT!) 28,655 Profit 7,540 Owners capital 12,000 TOTAL LIABILITIES AND EQUITY 81,920

1. What is the correct amount of current assets?

2. What is the correct amount of retained earnings?

3. What is the correct heading for this statement? (1 mark)

options:

Terrific Computer Systems Ltd., Year ended December 31, 2021, Balance Sheet

Terrific Computer Systems Ltd., Balance Sheet, December 31, 2021

The heading above is correct.

December 31, 2021, Balance Sheet, Terrific Computer Systems Ltd.

Balance Sheet, December 31, 2021, Terrific Computer Systems Ltd.

Balance Sheet, Terrific Computer Systems Ltd., Year ended December 31, 2021

4. What is the correct amount of current liabilities?

5. What is the correct amount of total liabilities?

6. What is the correct amount of long-lived assets?

7. What is the correct amount of total equity?

8. What is the correct amount of long-term liabilities?

9. What is the correct amount of total assets?