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    Corrected Financial Statements

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    You have $5,000 to invest. A friend ask you to invest in her company. Here are the dot.com, inc. financial statements, which are summarized at the end of the first years as follows:

    Dot.com income statement: dec. 31,2004

    Revenues: $80,000
    Expenses: 60,000
    Net income: 20,000

    Dot.com balance sheet: dec. 31,2004

    Cash: 3,000 Liabilities: 30,000
    Other assets: 67,000 Equity: 40,000
    Total liabilities
    Total assets: 70,000 And equity: 70,000

    Visits with your friend turn up the following facts:

    a. software costs of $25,000 were recorded as assets. These costs should have been expensed. Dot.com paid cash for these expenses and recorded the cash payment correctly

    b. revenues and receivables of $10,000 were overlooked and omitted.

    c. the company owes an additional $5,000 for TV ads that aired in December.

    Questions

    1. What is Dot. com's most pressing need?

    2. Prepare corrected financial statements.

    3. Use your corrected statements to evaluate Dot. com's results of operations and financial position.

    4. Will you invest in Dot. Com? Explain.

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    https://brainmass.com/business/financial-statements/corrected-financial-statements-63635

    Solution Preview

    are summarized at the end of the first years as follows:

    Dot.com income statement: dec. 31,2004

    Revenues: $80,000
    Expenses: 60,000
    Net income: 20,000

    Dot.com balance sheet: dec. 31,2004

    Cash: 3,000 Liabilities: 30,000
    Other ...

    Solution Summary

    This provides the steps to provide corrected financial statements.

    $2.19

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