Music Mart Case 2-2

MUSIC MART, INC.
BALANCE SHEET AS OF ______
Assets        Liabilities and Owners’ Equity
Current assets:            Current liabilities:    
Cash    $25,636        Notes payable    $   6,500
Accounts receivable    2,620        Accounts payable        5,000
Inventory    4,700        Total current liabilities    11,500
Prepaid insurance        1,224            
Total current assets    34,180        Other liabilities:    
            Mortgage payable        9,000
            Total liabilities    20,500
            Owners’ equity    
Property:            Paid in capital    25,000
Land      12,000        Retained earnings           680
Total assets    $46,180        Total liabilities
and owners’ equity    
$46,180

Answers to Questions:
1.    Increase Inventory 5,000; increase Accounts Payable 5,000
2.    Decrease Inventory 1,500; increase Cash 2,300; increase R ...
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