1. Please write a four-to-six sentence paragraph on the following question. Good business and accounting practices require the exercise of good judgment. How should ethics be incorporated into making accounting judgments? Why is ethics important?
Tammy Shot is a realtor. She organized her business, called TS Realty, as a corporation on April 1, 2013. Tammy started the business by depositing $85,000 in cash into the business bank account and issued herself common stock. Consider the following facts as of April 30, 2013:
a. Tammy had $16,000 in her personal bank account and $21,000 in the business bank account.
b. Tammy owes $1,000 on a personal charge account with Kohl’s.
c. Tammy acquired business furniture for $21,000 on April 21. Of this amount, the business owes $11,000 on accounts payable at April 10.
d. Office supplies on hand at the real estate office of $11,000.
e. TS Realty owes $16,000 on a note payable for some land acquired for a total price of $110,000.
f. Tammy owes $120,000 on a personal mortgage on her personal residence, which she acquired in 2006 for a total price of $120,000.
2. Does it appear that the business can pay its debts? How can you tell?
3. Identify the personal items given in the preceding facts that should not be reported on the balance sheet of the business.