Poshe Services Co.
Balance Sheet
For the Year Ended May 31, 2012
Assets Liabilities
Current assets: Current liabilities:
Cash . . . . . . . . . . . . . . . .$ 14,000 Accounts receivable . . . .$ 32,500
Accounts payable . . . . . . . 24,000 Accum. depr.—building 155,000
Supplies . . . . . . . . . . . . . . 6,500 Accum. depr.—equipment 25,000
Prepaid insurance . . . . . . 12,000 Net income . . . . . . . . . . . 135,000
Land . . . . . . . . . . . . . . . . 180,000 Total liabilities . . . . . . . . . . . .. . $347,500
Total current assets . . . . . . . . . . . . $236,500
Property, plant, and equipment:
Owner’s Equity
Building . . . . . . . . . . . . $375,000 Wages payable . . . . . . . . . . . . . $ 2,500
Equipment . . . . . . . . . . .85,000 Hector Delgado, capital . . . . . 498,500
Total property, plant, Total owner’s equity . . . . . . . . . . . . . . . . .501,000
and equipment . . . . .. . . . . . . . . . 612,000
Total assets . . . . . . . . . . . . . . . . $848,500 Total liabilities and
owner’s equity . . . . . . . . . . . . $848,500
Answer:
1. The date of the statement should be “May 31, 2012” and not “For the Year
Ended May 31, 2012.”
2. Accounts payable should be a current liability.
3. Land should be classified as property, plant, and equipment.
4. “Accumulated depreciation” should be deducted from the related fixed asset.
5. An adding error was made in determining the amount of the total property,
plant, and equipment.
6. Accounts receivable should be a current asset.
7. Net income should be reported on the income statement.
8. Wages payable should be a current liability.
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