Carlos Verde owns a small nursery. He recently approached the local bank for a loan to finance an expansion of his nursery. Carlos 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.
VERDE GARDEN SPOT
Balance Sheet December 31, 2019
Additional information provided by owner:
1. The inventory has an original cost of $42,000. 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 $4,000 in Carlos Verde's personal checking account.
3. Depreciation allowable to date on the equipment is $5,000. Depreciation allowable to date on the truck is $3,000.
Definitions:
Integrated Contract
A written contract intended to be the complete and final representation of the parties’ agreement.
Written Contracts
Legally binding agreements that are recorded in writing rather than agreed upon orally or implied by conduct.
English Law
The legal system of England and Wales, which is based on common law principles, statutes, and legal precedents.
Statute of Frauds
A legal doctrine requiring certain types of contracts to be in writing and signed by the party to be charged in order to be legally enforceable.
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