Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 47

Big Screen Scripts is a service-type enterprise in the entertainment field, and its manager, William Pippin, has only a limited knowledge of accounting.ippin prepared the following balance sheet, which, although arranged satisfactorily, contains certain errors with respect to such concepts as the business entity and asset valuation.ippin owns all of the corporation's outstanding stock.

In discussion with Pippin and by inspection of the accounting records, you discover the following facts:
1.he amount of cash, $5,150, includes $3,400 in the company's bank account, $540 on hand in the company's safe, and $1,210 in Pippin's personal savings account.
2.ne of the notes receivable in the amount of $500 is an IOU that Pippin received in a poker game several years ago.he IOU is signed by "B.K.," whom Pippin met at the game but has not heard from since.
3.ffice furniture includes $2,900 for a Persian rug for the office purchased on November 20.he total cost of the rug was $9,400.he business paid $2,900 in cash and issued a note payable to Zoltan Carpet for the balance due ($6,500).s no payment on the note is due until January, this debt is not included in the liabilities above.
4.lso included in the amount for office furniture is a computer that cost $2,525 but is not on hand because Pippin donated it to a local charity.
5.he "Other Assets" of $22,400 represent the total amount of income taxes Pippin has paid the federal government over a period of years.ippin believes the income tax law to be unconstitutional, and a friend who attends law school has promised to help Pippin recover the taxes paid as soon as he passes the bar exam.
6.he asset "Land" was acquired at a cost of $39,000 but was increased to a valuation of $70,000 when one of Pippin's friends offered to pay that much for it if Pippin would move the building off the lot.
7.he accounts payable include business debts of $32,700 and the $3,105 balance owed on Pippin's personal MasterCard.
Instructions
a.repare a corrected balance sheet at November 30, 2015.
b.or each of the seven numbered items above, use a separate numbered paragraph to explain whether the treatment followed by Pippin is in accordance with generally accepted accounting principles.