Dave is the president of Avon Consulting Inc. Avon began business on January 1, 2012. The company's controller is out of the country on business. Dave needs a copy of the company's balance sheet for a meeting tomorrow and asks his assistant to obtain the required information from the company's records. She presents Dave with the following balance sheet. He asks you to review it for accuracy.
Avon Consulting Inc.
Balance Sheet
For the Year Ended December 31, 2012
Assets Liabilities and Stockholders' Equity
Accounts payable $13,000 Accounts receivable $16,000
Cash 21,000 Capital stock 20,000
Cash dividends paid 16,000 Net income for 2012 72,000
Furniture and equipment 43,000 Supplies 9,000
Required
1. Prepare a corrected balance sheet.
2. Draft a memo explaining the major differences between the balance sheet Dave's assistant prepared and the one you prepared.