Question

Eyelash Extension Company’s liabilities as reported on the June 30, 2017, balance sheet are shown below, along with its statement of changes in equity.

Accounts payable	$	181,100
Notes payable, due 2019		497,000
Total liabilities	$	678,100

Eyelash Extension Company Statement of Changes in Equity For Year Ended June 30, 2017
Jan Suzette, capital, June 30, 2016	$	498,000
Add: Profit		198,100
Total	$	696,100
Less: Withdrawals		286,700
Jan Suzette, capital, June 30, 2017	$	409,400

Eyelash Extension Company’s liabilities as reported on the June 30, 2017, balance sheet are shown below, along with its statement of changes in equity.

Accounts payable	$	181,100
Notes payable, due 2019		497,000
Total liabilities	$	678,100

Eyelash Extension Company Statement of Changes in Equity For Year Ended June 30, 2017
Jan Suzette, capital, June 30, 2016	$	498,000
Add: Profit		198,100
Total	$	696,100
Less: Withdrawals		286,700
Jan Suzette, capital, June 30, 2017	$	409,400

Jan is selling the business. A potential buyer has hired an accountant to review the accounting records and the following was discovered:

a. Eyelash Extension Company began selling a new product line this past year that offered a warranty to customers. It is expected that $49,700 of warranty work will result next year based on first-year sales. No entry was prepared on June 30 to show this.
b. Annual property taxes of $24,900 are due July 31, 2017; the income statement shows only one month of property expense resulting from an entry correctly recorded on July 31, 2016.
c. Interest on the notes payable is paid quarterly. No entry has been recorded since the last quarterly payment of $13,200 on May 1, 2017.
d. $17,900 of new office furniture was purchased on account and received on June 28. This transaction has not been recorded.
e. Unearned revenue of $22,700 has been included on the income statement.

Required:
Using the information provided, prepare a corrected statement of changes in equity and liabilities section of the balance sheet. (Round your intermediate calculations and final answers to the nearest whole dollar.)

	EYELASH EXTENSION COMPANY Statement of Changes in Equity For Year Ended June 30, 2017 Total

	EYELASH EXTENSION COMPANY Partial Balance Sheet June 30, 2017 Liabilities Current liabilities: Total current liabilities Non-current liabilities: Total liabilities

Answer 1

EYELASH EXTENSION COMPANY
Statement of Changes in Equity
For Year Ended June 30, 2017
Jan Suzette, capital, June 30, 2016	498000
Add: Profit (198100-49700-22825-8800-22700)	94075
Total	592075
Less: Withdrawals	286700
Jan Suzette, capital, June 30, 2017	305375

EYELASH EXTENSION COMPANY
Partial Balance Sheet
June 30, 2017
Liabilities
Current liabilities:
Accounts payable (181100 + 17900)	199000
Warranty liability	49700
Property taxes payable	22825
Interest payable	8800
Unearned revenue	22700
Total current liabilities		303025
Non-current liabilities:
Notes payable, due 2019		497000
Total liabilities		800025

Workings:

No.	Account Title	Debit	Credit
a.	Warranty expense	49700
	Warranty liability		49700
b.	Property taxes expense	22825
	Property taxes payable		22825
	($24900 x 11/12)
c.	Interest expense	8800
	Interest payable		8800
	($13200 x 2/3)
d.	Office Furniture	17900
	Accounts payable		17900
e.	Sales revenue	22700
	Unearned revenue		22700