Question - Assets Liabilities and Equity

Current Assets: Current Liabilities:

Cash 36,000 Prepaid insurance 2,400

Accounts receivable 8,000 Interest receivable 2,600

Land 35,000 Salaries payable 8,000

Supplies 6,800 Intangible assets 5,000

Operating expenses 2,000 Accounts payable 5,800

Total Current Assets 87,800 Total Current Liabilities 18,000

Salaries payable 61,000 Shareholder's Equity

Buildings 75,000 Retained earnings 58,000

Equipment 15,000 Common stock 69,000

Intangible assets 25,000 Short-term note 12,000

Total Noncurrent assets 176,000 Total Shareholders' Equity 139,000

Total Assets 263,800 Total Liabilities and Equity 157,000

Needs the property and equipment, at cost: section

Depreciation should have current liabilities

Long-term debt, excluding current installments

Other long term liabilities

Required:

A. Identify the errors in the balance sheet. There are 10.

B. Using good form, prepare a corrected, classified balance sheet.

C. Calculate the current ratio using the corrected amounts from the balance sheet prepared in b. What does this ratio measure? Discuss the implications of Great Lakes Inc current ratio.

D. Explain why it is important to properly follow GAAP when preparing financial statements.