A friend of yours recently started a small business and he’s prepared a balance sheet at the end of the first year end. He is puzzled because the balance sheet doesn’t balance and he’s not sure why not. Examine the balance sheet below and make any corrections needed. Your friend also said there were a couple of items he didn’t know what to do with: deposits from customers (the cash received was included in the cash balance) —$1,000; furniture and fixtures—$9,000.

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Balance Sheet as of September 30 Assets Liabilities and shareholder's equity Cash $4,000 Bank loan $8,000 Accounts payable 2,100 Accounts receivable 1,200 Inventory 5,000 Common shares 4,000 Cash dividend paid 1,100 Net income 5,200