Alexa Markowitz is a realtor. She buys and sells properties on her own, and she also earns commission as an agent for
Alexa Markowitz is a realtor. She buys and sells properties on her own, and she also earns commission as an agent for buyers and sellers. She organized her business as a corporation on March 16, 2017. The business received $60,000 cash from Markowitz and issued common shares in return. Consider the following facts as of March 31, 2017:
a. Markowitz has $5,000 in her personal bank account and $14,000 in the business bank account.
b. Office supplies on hand at the real estate office total $1,000.
c. Markowitz's business spent $25,000 for a ReMax franchise, which entitles her to represent herself as an agent. ReMax is a national affiliation of independent real estate agents. This franchise is a business asset.
d. The business owes $60,000 on a note payable for some undeveloped land acquired for a total price of $110,000.
e. Markowitz owes $100,000 on a personal mortgage on her personal residence, which she acquired in 2005 for a total price of $350,000.
f. Markowitz owes $1,800 on a personal charge account with Holt Renfrew.
g. Markowitz acquired business furniture for $10,000 on March 25. Of this amount, the business owes $6,000 on accounts payable at March 31?
1. Prepare the balance sheet of the real estate business of Alexa Markowitz Realtor Inc. at
March 31, 2017.
2. Does it appear that the realty business can pay its debts? How can you tell?
3. Explain why some of the items given in the preceding facts were not reported on the balance sheet of the business.