List any errors you can find in the following partial balance sheet:
Answer:
1. The interest receivable should be reported separately as a current asset. It
should not be deducted from notes receivable.
2. The allowance for doubtful accounts should be deducted from accounts
receivable.
A corrected partial balance sheet would be as follows:
Current assets:
Cash$ 78,500
Notes receivable300,000
Accounts receivable$1,200,000
Less allowance for doubtful accounts 11,500 1,188,500
Interest receivable4,500