Brock Morton Services Co.

Balance Sheet

For the Year Ended December 31, 2009

Assets Liabilities

Current assets: Current liabilities:

Cash $7,170 Accounts receivable $10,000

Accounts payable 7,500 Accum. dep.-building 12,525

Supplies 2,590 Accum. dep.-equipment 7,340

Prepaid insurance 800 Net income 11,500

Land 24,000

Total current assets $42,060 Total liabilities $41,365

Stockholders' Equity

Property, plant, and equipment: Wages payable $1,500

Building $43,700 Capital Stock 88,645

Equipment 29,250 Total stockholders' equity $90,145

Total property, plant,

and equipment 72,950

Total assets $131,510 Total liabilities and stockholders

' equity $131,510

Prepare a corrected balance sheet.

Brock Morton Services Co.

Corrected Balance Sheet as at December 31, 2009:

Assets:

Current Assets:

Cash $7,170

Accounts receivable 10,000

Supplies 2,590

Prepaid Insurance 800 $20,560

Non-Current Assets:

Land 24,000

Property, Plant, & Equipment 72,950

Less: Depreciation 19,865 53,085 $77,085

Total Assets $97,645

Liabilities + Equity:

Current Liabilities:

Accounts payable 7,500

Wages Payable 1,500 $9,000

Equity:

Capital Stock $88,645

Total Liabilities + Equity $97,645

Explanation:

A Balance shows the financial position of an entity by listing the assets (current and noncurrent) and the liabilities (current and noncurrent) plus the equity.

The assets are the financial resources owned by the entity funded through equity and liabilities. The liabilities are the financial obligations which an entity owes requiring future financial resources to be transferred to the creditors. The equity is the ownership right of the stockholders in the business. It is made up of financial resources contributed by the owners of the business and what the business has generated as retained earnings over the years, which are due to the owners.