Question

Exercise 2.2 Preparing a Balance Sheet (LO2-4)

The night manager of Willis Transportation Service, who had no accounting background, prepared the following balance sheet for the company at February 28, current year. The dollar amounts were taken directly from the company’s accounting records and are correct. However, the balance sheet contains a number of errors in its headings, format, and the classification of assets, liabilities, and owners’ equity.

WILLIS TRANSPORTATION SERVICE
Manager’s Report
8 P.M. Thursday
Assets Owners' Equity
Capital stock $ 94,000 Accounts receivable $ 72,000
Retained earnings 62,000 Notes payable 281,000
Cash 74,000 Supplies 14,000
Building 90,000 Land 70,000
Automobiles 175,000 Accounts payable 58,000
$ 495,000 $ 495,000
Prepare a corrected balance sheet.

Answer 1

Answer:

Explanation:

The corrected sheet is given below

WILLIS TRANSPORTATION SERVICE

Balance sheet

Feb-28

Assets

Cash 74000

Accounts Receivable 72000

Supplies 14000

Land 70000

Buildings 90000

Automobiles 175000

Total 495000

Liabilities & Owners' Equity

Liabilities:

Notes payable 281000

Accounts Payable 58000

Total Liabilities 339000

Owners Equity:

Capital Stock 94000

Retained earnings 62000

Total 495000