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.
|
Assets |
Liabilities |
||
|
Equipment |
$25,500 |
Common stock |
$26,000 |
|
Cash |
9,000 |
Accounts receivable |
(6,000) |
|
Supplies |
2,000 |
Retained earnings |
(2,000) |
|
Accounts payable |
(8,000) |
Notes payable |
10,500 |
|
$28,500 |
$28,500 |
Instructions
Explain to Lynn Benedict in a memo why the original balance sheet is incorrect, and what should be done to correct it.