LO2-2, LO2-4
PROBLEM 2.10A
Preparing a Balance Sheet;
Discussion of Accounting
Principles
Big Screen Scripts is a service-type enterprise in the entertainment field, and its manager, William
Pippin, has only a limited knowledge of accounting. Pippin prepared the following balance
sheet, which, although arranged satisfactorily, contains certain errors with respect to such con-
cepts as the business entity and asset valuation. Pippin owns all of the corporation's outstanding
stock.
Assets
Cash
Notes Receivable
Accounts Receivable
Land
Building
Office Furniture
Other Assets
Total
BIG SCREEN SCRIPTS
BALANCE SHEET
NOVEMBER 30, CURRENT YEAR
Liabilities & Owner's Equity
$\ 5,150
Liabilities:
2,700
Notes Payable.
$\ 67,000
2,450
Accounts Payable
35,805
70,000
Total liabilities
$\ 102,805
54,320
Owner's equity:
8,850
Capital Stock
5,000
22,400
Retained Earnings
58,065
$\ 165,870
Total
$\ 165,870