1. Sharon Kent is a realtor. She organized her business, called SK Realty, as a corporation on April 1, 2011. Sharon started the business by depositing $105,000 in cash into the business bank account and issued herself common stock. Consider the following facts as of April 30, 2011:
a. Sharon had $15,000 in her personal bank account and $61,000 in the business bank account.
b. Sharon owes $2,000 on a personal charge account with Kohl’s.
c. Sharon acquired business furniture for $32,000 on April 11. Of this amount, the business owes $11,000 on accounts payable at April 30.
d. Office supplies on hand at the real estate office of $11,000.
e. SK Realty owes $16,000 on a note payable for some land acquired for a total price of $110,000.
f. Sharon owes $190,000 on a personal mortgage on her personal residence, which she acquired in 2006 for a total price of $390,000.
Required:
1. Prepare the balance sheet of SK Realty as of April 30, 2011.
2. Does it appear that the business can pay its debts? How can you tell?
3. Identify the personal items given in the preceding facts that should not be reported on the balance sheet of the business.