Antonio Hanley owns a small automobile service center. He recently approached the local bank for a loan to finance an expansion of his service center. Antonio prepared the balance sheet given below and submitted it with his loan application. The balance sheet does not conform to generally accepted accounting principles. Using the additional information provided by the owner, prepare a corrected balance sheet in accordance with generally accepted accounting principles. $Antonio Hanley owns a small automobile service center. He recently approached the local bank for a loan to finance an expansion of his service center. Antonio prepared the balance sheet given below and submitted it with his loan application. The balance sheet does not conform to generally accepted accounting principles. Using the additional information provided by the owner, prepare a corrected balance sheet in accordance with generally accepted accounting principles. \begin{array}{l} \text { Liabilities and Owner's Equity }\\ \begin{array} { l r } \text { Accounts Payable } & 46,000 \\ \text { Note Payable on Family Car } & 18,000 \\ \text { Note Payable on Truck } & 12,000 \\ \text { Mortgage on House } & 254,000 \\ \text { Antonio Hanley, Capital } & \underline { 268,000 } \\ \text { Total Liabilities and Owner's Equity } & \underline { \underline { 598,000 } } \end{array} \end{array} Additional information provided by owner: 1. The inventory has an original cost of \$ 84,000 . It is listed on the balance sheet at what it would cost to purchase today. 2. Included in the cash listed on the balance sheet is \$ 8,000 in Antonio Hanley's personal checking account. 3. Depreciation allowable to date on the equipment is \$ 10,000 . Depreciation allowable to date on the truck is \$ 6,000 .$

\begin{array}{l}\text { Liabilities and Owner's Equity }\\\begin{array} { l r } \text { Accounts Payable } & 46,000 \\\text { Note Payable on Family Car } & 18,000 \\\text { Note Payable on Truck } & 12,000 \\\text { Mortgage on House } & 254,000 \\\text { Antonio Hanley, Capital } & \underline { 268,000 } \\\text { Total Liabilities and Owner's Equity } & \underline { \underline { 598,000 } }\end{array}\end{array}

Additional information provided by owner:
1. The inventory has an original cost of

\$ 84,000

. It is listed on the balance sheet at what it would cost to purchase today.
2. Included in the cash listed on the balance sheet is

\$ 8,000

in Antonio Hanley's personal checking account.
3. Depreciation allowable to date on the equipment is

\$ 10,000

. Depreciation allowable to date on the truck is

\$ 6,000

When a New Company Was Formed, One Partner Contributed Some

Multiple Choice

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