(Solution) - The manager of Salem News Inc prepared the company s balance -(2025 Original AI-Free Solution)

Paper Details

The manager of Salem News, Inc., prepared the company's balance sheet as of October 31, 2016, while the accountant was ill. The balance sheet contains numerous errors. In particular, the manager knew that the balance sheet should balance, so she plugged in the stockholders' equity amount needed to achieve this balance. The stockholders' equity amount is not correct. All other amounts are accurate.

Requirements
1. Prepare the correct balance sheet and date it properly. Compute total assets, total liabilities, and stockholders' equity.
2. Is Salem News actually in better (or worse) financial position than the erroneous balance sheet reports? Give the reason for your answer.
3. Identify the accounts listed on the incorrect balance sheet that should not be reported on the balance sheet. State why you excluded them from the correct balance sheet you prepared for Requirement 1. On which financial statement should these accounts appear?