Lynn Benedict, the bookkeeper for New York Company, has been trying to get the balance sheet to balance. The company’s balance sheet is shown below.
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New York Company |
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Balance Sheet |
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For the Month Ended December 31, 2012 |
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Assets |
Liabilities |
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Equipment |
$25,500 |
Owner’s capital |
$26,000 |
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Cash |
9,000 |
Accounts receivable |
(6,000) |
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Supplies |
2,000 |
Owner’s drawings |
(2,000) |
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Accounts payable |
(8,000) |
Notes payable |
10,500 |
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$28,500 |
$28,500 |
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Instructions
Explain to Lynn Benedict in a memo why the original balance sheet is incorrect, and what should be done to correct it.