Suzette Companys liabilities as reported on the June 30, 2014, balance sheet are shown below, along with
Question:
Suzette Company’s liabilities as reported on the June 30, 2014, balance sheet are shown below, along with its statement of changes in equity.
Accounts payable ................................................................................................ $179,400
Notes payable, due 2016 ....................................................................................... 480,000
Total liabilities..................................................................................................... $659,400
Suzette Company
Statement of Changes in Equity
For Year Ended June 30, 2014
Jan Suzette, capital, June 30, 2013 ......................................................................... $481,000
Add: Net income ....................................................................................................... 196,400
Total ......................................................................................................................... $677,400
Less: Withdrawals...................................................................................................... 285,000
Jan Suzette, capital, June 30, 2014 ......................................................................... $392,400
Jan is selling the business. A potential buyer has hired an accountant to review the accounting records and the following was discovered:
a. Suzette Company began selling a new product line this past year that offered a warranty to customers. It is expected that $48,000 of warranty work will result next year based on first-year sales. No entry was prepared on June 30 to show this.
b. Annual property taxes of $20,690 are due July 31, 2014; the income statement shows only one month of property expense resulting from an entry correctly recorded on July 31, 2013.
c. Interest on the notes payable is paid quarterly. No entry has been recorded since the last quarterly payment of $8,200 on May 1, 2014.
d. $16,200 of new office furniture was purchased on account and received on June 28. This transaction has not been recorded.
e. Unearned revenue of $21,000 has been included on the income statement.
Required
Using the information provided, prepare a corrected statement of changes in equity and liabilities section of the balance sheet (ignore PST/GST and round all calculations to the nearest whole dollar).
Analysis Component: Which GAAP are violated when accrued liabilities are not recorded? Explain your answer.
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
SUZETTE COMPANY Statement of Changes in Equity For Year Ended June 30 2014 Jan Suzette capital June ...View the full answer
Fundamental Accounting Principles Volume II
ISBN: 978-1259066511
14th Canadian Edition
Authors: Larson Kermit, Jensen Tilly
