Shelia Shaw Consulting

SHEILA SHAW CONSULTING

Balance Sheet

August 31, 2007

Assets Liabilities

Current assets: Current liabilities:

Cash $ 21,300 Accounts payable $ 1,250

Accounts receivable 3,800 Prepaid rent 2,050

Supplies 875 Unearned fees 1,150

Salaries payable 150 Total liabilities $ 4,450

Prepaid insurance 1,670

Total current assets $ 27,795

Property, plant, and

equipment: Owner’s Equity

Office equipment $ 21,250 Sheila Shaw, capital 47,720

Less accum. depr. 675

Total Property, plant,

and equipment 20,575 Total liabilities and

Total assets $ 48,370 owner’s equity $ 52,170

I have highlighted in red the two errors that were made in the income statement. Salaries payable of $150 should be listed as a current liability and prepaid rent of $2,050 should be listed as a current asset. I will post below an example of the Balance sheet with these 2 errors fixed. This allows the Assets and Liabilities to equal out.

SHEILA SHAW CONSULTING

Balance Sheet

August 31, 2007

Assets Liabilities

Current assets: Current liabilities:

Cash $ 21,300 Accounts payable $ 1,250

Accounts receivable 3,800 Salaries payable 150

Supplies 875 Unearned fees 1,150

Prepaid rent 2050 Total liabilities $ 2,550

Prepaid insurance 1,670

Total current assets $ 29,695

Property, plant, and

equipment: Owner’s Equity

Office equipment $ 21,250 Sheila Shaw, capital 47,720

Less accum. depr. 675

Total Property, plant,

and equipment 20,575 Total liabilities and

Total assets $ 50,270 owner’s equity $ 50,270

SHEILA SHAW CONSULTING

Income Statement

For the Month Ended August 31, 2007

Fees earned $ 24,325

Expenses:

Salary expense $1,550

Rent expense 1,200

Supplies expense 1,250

Insurance expense 1,000

Miscellaneous expense 715

Depreciation expense………………………………………. 675

Interest expense 65

Bad Debt expense 150...