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Corrected Balance Sheet for Joe's Shop

Joe's Bike shop
Balance Sheet
As of December 31, 2008

Current Assets:
Cash $15,000
Merchandise Inventory $30,000
Merchandise Sold, at cost $37,500
Prepaid Insurance $1,000
Advanced From customer $(1,000)
Total Current Assets $82,500

Property, Plant, and equipment:
Equipment $8,000
Less Note payable $(5,000)
Total assets $85,500

Liabilities and Shareholders' equity
Current Liabilities
Bike Sales $55,000
A/P $2,000
Accumulated Depreciation $700
Rent payable $1,000
Total Current Liabilities $58,700

Shareholders' Equity
Common stock 1,000 shares at $10 par value $10,000
Additional Paid-in Capital $7,500
Retained Earnings $9,300
Total shareholders equity $26,800
Total liabilities and shareholders equity $85,500

Do a corrected balance sheet for Joe's shop


Solution Preview

Hi there,

Please see the attached Excel spreadsheet with your answer.

From what I can see in the way that the balance sheet was initially set up, the item 'merchandise sold, at cost' should not be included in the balance sheet. Once inventory is sold, it ...

Solution Summary

This solution prepares a corrected balance sheet for Joe's shop using the information supplied on assets, liabilities and shareholders' equity.