P2-3 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.
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.)
Required:
4 Prepare a trial
balance at December 31, 2015.
Required:
5 Prepare a
classified balance sheet at December 31, 2015.
Required:
6 Compute the
current ratio for 2015. (Round
your answer to 2 decimal places.)
TUTORIAL PREVIEW
|
Cash
|
|||
|
Beg. Bal.
|
22,000
|
|
|
|
(e)
|
11,000
|
10,000
|
(a)
|
|
(f)
|
9,000
|
5,000
|
(b)
|
|
(i)
|
1,000
|
5,000
|
©
|
File name:
CF Unit1 P2-3 Cougar Plastics.xls File type: .xls PRICE: $15
