Question

18, and financing activities. This Incomalton would be particularly helpful in assessing the strength of the company's ability to satisfy its obligations as they come due in light of the relatively wenk balance sheet LO2.4 EXERCISE 2.2 Preparing a Balance Sheet The night manager of Willis Transportation Service, who had no accounting background, prepared the following balance sheet for the company at February 28, 2015. The dollar amounts were taken directly from the company accounting records and are correct. However, the balance sheet contains a number of errors in its headings, format, and the classification of assets, Imbilities, and owners'equity WILLIS TRANSPORTATION SERVICE MANAGER'S REPORT 8 P.M. THURSDAY Assets Owners' Equity Capital Stock Retained Earnings Cash.... Bulding Automobiles $ 92,000 62,000 79,000 80,000 165,000 $478,000 Accounts Receivable Notes Payable Supplies Land Accounts Payable $ 70,000 288,000 14,000 70,000 36,000 $478,000 Prepare a corrected balance sheet Include a proper heading HOBB ©

Answer 1

Assets
Current assets
Cash	$          79,000
Accounts receivable	$          70,000
Supplies	$          14,000
Total current assets		$     163,000
Property, plant, and equipment
Land	$          70,000
Building	$          80,000
Automobiles	$        165,000
Net property, plant, and equipment		$     315,000
Total assets		$     478,000
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable		$       36,000
Long-term liabilities
Notes payable		$     288,000
Total liabilities		$     324,000
Shareholders' equity
Capital stock	$          92,000
Retained earnings	$          62,000
Total shareholders' equity		$     154,000
Total liabilities and shareholders' equity		$     478,000

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