Question - Assets Liabilities and Equity
Current Assets: Current Liabilities:
Cash 36,000 Prepaid insurance 2,400
Accounts receivable 8,000 Interest receivable 2,600
Land 35,000 Salaries payable 8,000
Supplies 6,800 Intangible assets 5,000
Operating expenses 2,000 Accounts payable 5,800
Total Current Assets 87,800 Total Current Liabilities 18,000
Salaries payable 61,000 Shareholder's Equity
Buildings 75,000 Retained earnings 58,000
Equipment 15,000 Common stock 69,000
Intangible assets 25,000 Short-term note 12,000
Total Noncurrent assets 176,000 Total Shareholders' Equity 139,000
Total Assets 263,800 Total Liabilities and Equity 157,000
Needs the property and equipment, at cost: section
Depreciation should have current liabilities
Long-term debt, excluding current installments
Other long term liabilities
Required:
A. Identify the errors in the balance sheet. There are 10.
B. Using good form, prepare a corrected, classified balance sheet.
C. Calculate the current ratio using the corrected amounts from the balance sheet prepared in b. What does this ratio measure? Discuss the implications of Great Lakes Inc current ratio.
D. Explain why it is important to properly follow GAAP when preparing financial statements.