Question

Purpose For this assignment, students will be responsible for explaining the purpose of a balance sheet and preparing a corrected balance sheet Instructions (Problem TIF 4-3 Warren, Reeve & Duchac 14E) Your friend Daniel Nat recently began work as the lead accountant for the Asheville Company. Dan prepared the following balance sheet for December 31, 2018: Asheville Company Balance Sheet For the Year Ended December 31, 2018 Assets: Land $100,000 Accounts payable 10,000 Accounts receivable 12,500 Cash 10,000 Common stock 115,000 Total Assets $247.500 Liabilities: Equipment $125,000 Retained earnings 120,000 Wages payable 2.500 Total Liabilities $247.500 Directions 1. Write a one paragraph letter to Daniel explaining the errors in the Balance Sheet. A paragraph is at least four sentences. Please use correct grammar and full sentences. Please do not copy and paste sentences directly from the textbook (use your own words. 2. Prepare a corrected Balance Sheet How to Submit Assignments: • Type answers directly in the Canvas Text Box. How do you type answers into the Canvas Text Box? Please read the below Canvas Guide Grading Rubric: Before completing assignment, please make sure to review the Grading Rubric What is a Grading Rubric? it is pure magic! The purpose of a grading rubric is to provide students with information about how their assignment will be graded. In other words. I will be using the Grading Rubric to grade your assignment. Therefore, you know in advance how to earn 100% on this assignment - that's magic!

Answer 1

1.

Hello Daniel, I came across the balance sheet you have prepared for the company and found few errors. A balance sheet should comply with the accounting equation "Assets=Liabilities+Equity". You have placed accounts payable in the assets side which is actually a current liability. You have placed Equity in the assets section which should be on the liabilities side of the balance sheet. You have placed Equipment which is an asset, on the liabilities side of the balance sheet.

2.

Asheville Company
Balance Sheet
For the Year Ended December 31,2018
Assets
Land	$         100,000
Equipment	$         125,000
Cash	$           10,000
Accounts receivable	$           12,500
Total Assets	$         247,500
Liabilities
Accounts payable	$           10,000
Wages payable	$              2,500
Common stock	$         115,000
Retained earnings	$         120,000
Total Liabilities	$         247,500