Reference no: EM132613865
Preparing a Balance Sheet; applying the entity assumption; making business decisions) Sandy Healey is a realtor. She organized the business as a corporation on April 16, 20X7. The business received $85,000 cash from Healey and issued shares to Healey. Consider the following facts as of April 30, 20X7.
a. Healey has $15,000 in her personal bank account and $70,000 in the business bank account.
b. Healey owes $2,000 on a personal charge account with a department store.
c. Healey acquired business furniture for $38,000 on April 25. Of this amount, the business owes $32,000 on accounts payable at April 30.
d. Office supplies on hand at the real estate office total $13,000.
e. Healey's business owes $36,000 on a note payable for some land acquired for a total price of $112,000.
f. Healey's business spent $22,000 for a Realty Universe franchise, which entitles her to represent herself as an agent. Realty Universe is a national affiliation of independent real estate agents. This franchise is a business asset.
g. Healey owes $142,000 in mortgage on her personal residence, which she acquired in 20X1 for a total price of $360,000.
Requirements:
Question 1. Prepare the Balance Sheet of the real estate business of Sandy Healey Realtor, Inc., at April 30, 20X7.
Question 2. Does it appear that the realty business can pay its debts? How can you tell?
Question 3. Identify the personal items given in the facts that should not be reported on the Balance Sheet of the business.
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