P1 – 5A:

1. Since the boat belongs to Jensen himself and not to the company, Jensen should not list the boat on either the assets or the liabilities. 2. No matter the surge in demand Jensen should still record his inventory at what it is and not what he thinks it should be. 3. Jensen should not include the $10,000 that his brother owes him in this balance sheet. Jensen does not have that money now. It’s been 5 years anyways. He probably won’t ever see that money again.

Merando Corporation
Balance Sheet
December 31, 2014 Assets | Liabilities & Stockholder’s Equity | Cash | $20,000 | Accounts Payable | $30,000 | Accounts Receivable | 40,000 | Notes Payable | 15,000 | Inventory | 25,000 | Stock Holder’s Equity | 40,000 | TOTAL ASSETS | $85,000 | TOTAL LIABILITIES | $85,000 |

P2 – 3A: Question #1
Income Statement
Ramirez Enterprises
April 30, 2014 Sales Revenue | $5,100 | Cost of Goods Sold | (1,060) | Gross Profit | $4,040 | Insurance Expense | 210 | Interest Expense | 400 | Income Tax Expense | 165 | Depreciation Expense | 335 | Salaries and Wages Expense | 700 | Net Income | $2,230 |

P2 – 3A: Question #2
Ramirez Enterprises
Classified Balance Sheet
April 30, 2014

Assets
Current Assets
Cash $1,270
Accounts Receivable 810
Inventory 967
Prepaid Insurance 60 Total Current Assets $3,107
Short-Term Investments Stock Investments 1,200
Property, Plant and Equipment Land 3,100 Equipment $ 2,420 Less: Accumulated depreciation – equipment 670 1,750 4,850
Total Assets $9,157

Liabilities and Stockholder’s Equity
Current Liabilities Notes Payable $61 Accounts Payable 834 Salaries and Wages Payable 222 Salaries and Wages Expense 700 Income Tax