prepare a correct balance sheet 581584

The amounts for property, plant, and equipment presented in the balance sheet were reported net of accumulated depreciation (cost less accumulated depreciation).These amounts were $4,000 for cleaning equipment and $5,000 for delivery trucks as of January 1, 2011. Depreciation for 2011 was $2,000 for cleaning equipment and $5,000 for delivery trucks.

WHITEGLOVES JANITORIAL SERVICE INC.

Balance Sheet

December 31, 2011

Assets

Liabilities and Stockholders’ Equity

Current assets

Current liabilities

Cash

$ 6,500

Notes payable

$10,000

Accounts receivable

9,000

Accounts payable

2,500

Janitorial supplies

5,200

Total current liabilities

12,500

Prepaid insurance

4,800

Long term liability

Total current assets

25,500

Notes payable

15,000

Property, plant, and equipment

Total liabilities

27,500

Cleaning equipment (net)

22,000

Stockholders’ equity

Delivery trucks (net)

34,000

Common stock

$ 40,000

Total property, plant, and equipment

56,000

Retained earnings

14,000

54,000

Total assets

$81,500

Total liabilities and stockholders’ equity

$81,500

Instructions

With the class divided into groups, answer the following.

(a) Prepare a correct balance sheet.

(b) Were the terms of the bank loan met? Explain.