Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / P2 3 Recording Transactions in T Accounts Preparing the Balance Sheet from a Trial Balance...

P2 3 Recording Transactions in T Accounts Preparing the Balance Sheet from a Trial Balance and Evaluating the Current Ratio LO2 2 2 4 2 5 Cougar Plastics Company has been operating for three

P2-3 Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio LO2-2, 2-4, 2-5      
                     
Cougar Plastics Company has been operating for three years. At December 31, 2014, the accounting records reflected the following:      
                     
                     
  Cash $ 22,000   Accounts payable $               15,000        
  Investments (short-term) 3,000   Accrued liabilities payable                 4,000        
  Accounts receivable 3,000   Notes payable (short-term)                 7,000        
  Inventory   20,000   Long-term notes payable               47,000        
  Notes receivable (long-term) 1,000   Common stock                 10,000        
  Equipment   50,000   Additional paid-in capital               80,000        
  Factory building 90,000   Retained earnings                 31,000        
  Intangibles   5,000                
                     
                     
                     
During the year 2015, the company had the following summarized activities:              
                     
a. Purchased short-term investments for $10,000 cash.              
b. Lent $5,000 to a supplier who signed a two-year note.              
c. Purchased equipment that cost $18,000; paid $5,000 cash and signed a one-year note for the balance.        
d. Hired a new president at the end of the year. The contract was for $85,000 per year plus options to purchase company stock at a set price based on company performance.
e. Issued an additional 2,000 shares of $0.50 par value common stock for $11,000 cash.            
f. Borrowed $9,000 cash from a local bank, payable in three months.            
g. Purchased a patent (an intangible asset) for $3,000 cash.              
h. Built an addition to the factory for $24,000; paid $8,000 in cash and signed a three-year note for the balance.        
i. Returned defective equipment to the manufacturer, receiving a cash refund of $1,000.          
                     
Required:                    
1. & 2. Record each necessary entry for the events in 2015 in T-accounts (including referencing) and determine the ending balances. The balances at the end of
  2014 have been entered as beginning balances for 2015.              
  (Transaction (a) has been completed in the T-accounts as an example.)            
                     
Cash   Investments (short-term)    
Beg. Bal. 22,000       Beg. Bal. 3,000        
    10,000 (a)   (a) 10,000        
                     
                     
    3,000 (g)   End. Bal.          
               
             
End. Bal.            
             
Accounts Receivable   Inventory    
Beg. Bal. 3,000       Beg. Bal. 20,000        
                     
                     
End. Bal.         End. Bal.          
                     
Notes Receivable (long-term)   Equipment    
Beg. Bal. 1,000       Beg. Bal. 50,000        
                     
                     
                     
End. Bal.         End. Bal.          
                     
Factory Building   Intangibles    
Beg. Bal. 90,000       Beg. Bal. 5,000        
          (g) 3,000        
                     
                     
End. Bal.         End. Bal.          
                     
Accounts Payable   Accrued Liabilities Payable    
Beg. Bal.   15,000     Beg. Bal.   4,000      
                     
                     
End. Bal.         End. Bal.          
                     
Notes Payable (short-term)   Long-Term Notes Payable    
Beg. Bal.   7,000     Beg. Bal.   47,000      
                     
                     
                     
End. Bal.         End. Bal.          
                     
Common Stock   Additional Paid-in Capital    
Beg. Bal.   10,000     Beg. Bal.   80,000      
                     
                     
                     
End. Bal.         End. Bal.          
             
Retained Earnings    
Beg. Bal.   31,000      
           
           
End. Bal.          
                     
Required:                    
4 Prepare a trial balance at December 31, 2015.              
                     
  COUGAR PLASTICS COMPANY              
  Trial Balance              
  At December 31, 2015              
  Account Titles Debit Credit              
  Cash                  
  Investments (short-term)                  
  Accounts receivable                  
  Inventory                  
  Notes receivable (long-term)                  
  Equipment                  
  Factory building                  
  Intangibles                  
  Accounts payable                  
  Accrued liabilities payable                  
  Notes payable (short-term)                  
  Notes payable (long-term)                  
  Common stock                  
  Additional paid-in capital                  
  Retained earnings                  
  Totals $243,000 $0              
                     
Required:                    
5 Prepare a classified balance sheet at December 31, 2015.              
                     
  COUGAR PLASTICS COMPANY            
  Balance Sheet            
  At December 31, 2015            
  Assets Liabilities            
  Current assets:   Current liabilities:              
                     
                     
                     
                     
                     
      Total current liabilities                                   -              
  Total current assets                                  -                  
  Non-current assets:                  
      Total liabilities 0            
      Stockholders' Equity            
                     
                     
                     
                     
  Total non-current assets                                  -   Total stockholders' equity                                   -              
  Total assets $                              -   Total liabilities and stockholders' equity $                              -              
                     
Required:                    
6 Compute the current ratio for 2015. (Round your answer to 2 decimal places.)            
                     
  Current ratio                  
 

May 20 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions