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Assignment 1 - Chapter 2 Wiley Legers, the accountant for and sole owner of a small service company called Small Service Co., created the following balance sheet. On the surface, the balance sheet appears to be formatted correctly, but it does contain several errors. Assets $181,600 Cash $5,000 Accounts Receivable 3,000 Notes Receivable; due in 6 months 4,000 Office Furniture 9,600 Building 75,000 Land 60,000 Other Assets 25,000 Total Assets Liabilities Accounts Payable $32,000 Notes Payable $65,000 Total Liabilities Stockholders' Equity Capital Stock Retained Earnings Total Stockholders' Equity & Liabilities $97,000 10,000 74,600 $181,600 Wiley used the following information to prepare the balance sheet: 1. The cash balance includes $2,000 in the company bank account, $1,200 that the company keeps in its safe, and $1,800 that Wiley has in his personal savings account. 2. Included in the Notes Receivable balance, is a $600 IOU that Wiley received in a poker game during his buddy's bachelor party. 3. Office Furniture includes $2,500 for a conference table purchased in November. The total cost of the table was $10,000. The company paid $2,500 in cash and issued a note payable for the remaining balance. Since the balance owed is not due for two years, Wiley did not include that $7,500 in the liabilities. Do not worry about depreciation. 4. Also included in Office Furniture is an $800 computer that Wiley donated to a local school system 6 months ago. Do not worry about depreciation. 5. The Other Assets of $25,000 represent income taxes that Wiley has paid over the last five years. During the poker game at his buddy's bachelor party, Wiley was convinced by the same guy that owes him $600 that paying income taxes is unconstitutional. This same guy promised Wiley that he would be able to recover these tax dollars as soon as he passed the bar exam. 6. The Land was acquired for $15,000, but Wiley increased the value because the county assesses property tax on that land based on a $60,000 value. 7. The accounts payable include business debts of $30,000 and $2,000 that Wiley owes on his personal credit cards. Required: Note that did classify the assets or liabilities. Prepare a corrected Balance sheet in the form of a Classified Balance Sheet. (Hint: Retained Earnings will have to be adjusted to balance the new balance sheet)

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