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    Corrected Balance Sheet

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    I need some help with approaching this question. Any help will be greatly appreciated.

    Pete is the president of Island Enterprises. Island Enterprises began business on January 1, 2008. The company's controller is out of the country on business. Pete needs a copy of the company's balance sheet for a meeting tomorrow and asks his assistant to obtain that required information from the company's records. She presents Pete with the following balance sheet. He asks you to review it for accuracy.

    Island Enterprises
    Balance Sheet
    For the Year Ended December 31, 2008

    Assets Liabilities and Stockholder's Equity
    Accounts payable $29,600 Accounts receivable $23,200
    Building and equipment 177,300 Supplies 12,200
    Cash 14,750 Capital stock 100,000
    Cash dividends paid 16,000 Net income for 2008 113,850

    How would I:
    1. Prepare a corrected balance sheet.
    2. Draft a memo explaining the major differences between the balance sheet Pete's assistant prepared and the corrected balance sheet.

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    Solution Summary

    Correct balance sheets are examined.