P1-39B Corporate attributes, applying the entity concept, and preparing financial statements
Sandy White is a realtor. She organized her business as a corporation, Sandy White, Realtor, P.C. (Professional Corporation), by investing $27,000 cash. The business issued common stock to her. Consider the following facts at May 31, 2012:
a. The business owes $62,000 on a note payable for land that the business acquired for a total price of $80,000.
b. The business spent $26,000 for a Minko Banker real estate franchise, which entitles the business to represent itself as a Minko Banker office. This franchise is a business asset.
c. White owes $70,000 on a personal mortgage for her personal residence, which she acquired in 2012 for a total price of $130,000.
d. White has $4,000 in her personal bank account, and the business has $13,000 in its bank account.
e. White owes $3,000 on a personal charge account with Chico’s.
f. The office acquired business furniture for $20,000 on May 25. Of this amount, the business owes $5,000 on account at May 31.
g. Office supplies on hand at the real estate office total $1,100.
Requirements
1. White was concerned about liability exposure. Which corporate feature limits White’s personal liability?
2. Prepare the balance sheet of the real estate business of Sandy White, Realtor, P.C., at May 31, 2012.
3. Identify the personal items that would not be reported on the business records.
Click here for the solution: Sandy White is a realtor
