Objectives: Apply underlying accounting concepts; evaluate business operations; construct a balance sheet.
Jose Alvarado is a realtor. He organized the business as a corporation on April 16, 2015. The business received $60,000 cash from Alvarado and issued common stock. Consider the following facts as of April 30, 2015:
a. Alvarado has $18,000 in his personal bank account and $43,000 in the business bank account.
b. Alvarado owes $7,500 on a personal charge account with Sears.
c. Alvarado acquired business furniture for $19,800 on April 24. Of this amount, the business owes $15,000 on accounts payable at April 30.
d. Office supplies on hand at the real estate office total $2,000.
e. Alvarado's business owes $128,000 on a note payable for some land acquired for a total price of $150,000.
f. Alvarado's business spent $16,000 for a USA Realty franchise, which entitles him to represent himself as an agent. USA Realty is a national affiliation of independent real estate agents. This franchise is a business asset.
g. Alvarado owes $197,000 on a personal mortgage on his personal residence, which he acquired in 2009 for a total price of $361,000.