Q1) Balance sheet for Verne General Partnership given below. Based completely on balance sheet, do you see any potential difficulties Verne may have? What strengths does balance sheet show? Describe. What would you learn from studying income statement for year ended 2008?
| Verne General Partnership |
| Balance Sheet |
| As of December 31, 2008 |
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| Assets |
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Liabilities and Partners' Equity |
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Liabilities |
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| Cash |
|
$30,000 |
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Accounts Payable |
$25,000 |
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| Accounts Receivable |
|
10,000 |
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Accrued Expenses Payable |
20,000 |
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| Inventory (FIFO) |
|
20,000 |
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Deferred Income from Sales |
60,000 |
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| Equipment |
150,000 |
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Long-term Note Payable |
70,000 |
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| Less: Accumulated Depreciation |
(20,000) |
130,000 |
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Total Liabilities |
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$175,000 |
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| Building |
650,000 |
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Partners' Equity |
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| Less: Accumulated Depreciation |
(70,000) |
580,000 |
|
Verne |
$600,000 |
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| Land |
|
80,000 |
|
Jules |
75,000 |
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Total Partner's Equity |
|
675,000 |
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| Total Assets |
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$850,000 |
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Total Liabilities and Partners' Equity |
$850,000 |