Question

The manager of Top Runner, Inc., prepared the company's balance sheet as of June 30, 2018, while the company's accountant was ill. The balance sheet contains numerous errors. In particular, the manager knew that the balance sheet should balance, so she plugged in the stockholders' equity amount needed to achieve this balance. The stockholders' equity amount is not correct. All other amounts are accurate. (Click the icon to view the manager's balance sheet.) Read the requirements. Requirement 1. Prepare the correct balance sheet and date it properly. Compute total assets, total labilities, and stockholders' equity. (Do not classify the balance sheet into current and long-term sections. In the first part complete the assets section of the balance sheet. In the second part complete the liabilities and stockholders' equity section of the balance sheet. If a box is not used in the balance sheet, leave the box empty; do not select a label or enter a zero.) Assets Liabilities Total liabilities

Answer 1

Top Runner, Inc.
Balance Sheet
June 30, 2018
ASSETS	$	LIABILITIES	$
Cash	11000	Accounts Payable	7000
Equipment	36700	Note Payable	55500
Land	82000	Total Liabilities	62500
Notes receivable	14700
Accounts Receivable	3000
		Stock Holders' Equity	84900
Total Assets	147400	Total Liabilities & Stockholders' Equity	147400

Requirement 2:

Top Runner is in better financial position because stockholders' Equity has increased by (84900 - 66100) $18800, and liabilities have decreased by (62500-76100) $ 13600.

Requirement 3:

The following accounts will not be included in the Balance Sheet:

• Utilities Expense
• Advertising Expense
• Salary Expense
• Interest expense
• Office supplies (expense)

These accounts are expense accounts. They are not assets or liabilities for the accounting treatment, unless they are yet to be paid.

If these expenses have not been paid yet, they will be considered as liabilities, as Expenses Payable.

All these accounts will be recorded in Income Statement to asceratain the profit or loss for the period.