Question

Michael Hamwey is a realtor. He organized the business as a corporation on August 16, 2017. The business received $65,000 cash from Hamwey and issued common stock. Consider the following facts as of August 31, 2017.

a.	Hamwey has $14,000 in his personal bank account and $63,000 in the business bank account.
b.	Hamwey owes $9,300 on a personal charge account at a local department store.
c.	Hamwey acquired business furniture for $10,500 on August 24. Of this? amount, the business owes $3,000 on accounts payable at August 31.
d.	Office supplies on hand at the real estate office total $4,000
e.	Hamwey?'s business owes $115,000 on a note payable for some land acquired for a total price of $159,000.
f.	HamweyHamwey?'s business spent $18,000 for a Realty GroupRealty Group ?franchise, which entitles him to represent himself as an agent. Realty GroupRealty Group is a national affiliation of independent real estate agents. This franchise is a business asset.
g.	Hamwey owes $196,000 on a personal mortgage on his personal? residence, which he acquired in 2012 for a total price of $424,000.

Requirements

1. Prepare the balance sheet of the real estate business of

Michael Hamwey ?Realtor, Inc., at

August 31?, 2017.

2. Does it appear that the realty business can pay its? debts? How can you? tell?

3. Identify the personal items given in the preceding facts that should not be reported on the balance sheet of the business.

Requirement 1. Prepare the balance sheet of the real estate business of

Michael Hamwey ?Realtor, Inc., at August 31?, 2017.

? (Do not classify the balance sheet into current and? long-term sections. If a box is not used in the balance sheet leave the box? empty; do not select a label or enter a? zero.)

Answer 1

Part 1 Michael Hamway Balance sheet as on August 31st 2017 Part 2 In short term, it does not appear that Hamway can pay its debts because the liquid assets are of only 76500 where as notes payable are of $1180000. To repay the loan they have to sell their land of $159000 Part 3 Personal items not to be reported are: Personal bank a/c 14000 Personal loan 9300 Personal mortgage 196000 Personal residence 424000