Question

Here is the partial work sheet for Eckland Stereo.

Eckland Stereo

Work Sheet

For Year Ended December 31, 20--

1		Balance Sheet	Balance Sheet
2	Account Name	Debit	Credit
3	Cash	14,815.00
4	Notes Receivable	7,500.00
5	Accounts Receivable	30,170.00
6	Merchandise Inventory	50,244.00
7	Prepaid Property Taxes	2,115.00
8	Prepaid Insurance	1,640.00
9	Land	16,700.00
10	Building	50,000.00
11	Accumulated Depreciation, Building		15,900.00
12	Computer Equipment	6,892.00
13	Accumulated Depreciation, Computer Equipment		5,674.00
14	Store Equipment	7,230.00
15	Accumulated Depreciation, Store Equipment		4,424.00
16	Delivery Equipment	4,300.00
17	Accumulated Depreciation, Delivery Equipment		3,470.00
18	Notes Payable		5,215.00
19	Accounts Payable		27,140.00
20	Mortgage Payable (current portion)		2,800.00
21	Mortgage Payable		65,200.00
22	M. J. Eckland, Capital		57,314.00
23	M. J. Eckland, Drawing	23,000.00
24
25	Wages Payable		1,984.00
26		214,606.00	189,121.00
27	Net Income		25,485.00
28	Total	$214,606.00	$214,606.00

	Required:
1.	Prepare a statement of owner’s equity (no additional investment).
2.	Prepare a balance sheet.
3.	Determine the amount of the working capital.
4.	Determine the current ratio.

Answer 1

1	Eckland Stereo
	Statement of Owners Equity
	As on Year Ended December 31, 20--
	M.J.Eckland Capital, Beginning			57314
	Add : Net income			25485
				82799
	Less : Drawings			23000
	M.J.Eckland Capital, Ending			59799
2	Eckland Stereo
	Balance Sheet
	As on Year Ended December 31, 20--
	Assets
	Current Assets
	Cash		14815
	Notes Receivable		7500
	Accounts Receivable		30170
	Merchandise Inventory		50244
	Prepaid Property Taxes		2115
	Prepaid Insurance		1640
	Total Current Assets			106484
	Property, Plant and Equipment
	Land		16700
	Building	50000
	Less : Accumulated Depreciation	15900	34100
	Computer Equipment	6892
	Less : Accumulated Depreciation	5674	1218
	Store Equipment	7230
	Less : Accumulated Depreciation	4424	2806
	Delivery Equipment	4300
	Less : Accumulated Depreciation	3470	830
	Total Property, plant and equipment			55654
	Total Assets			162138
	Liabilities and Capital
	Current Liabilities
	Notes Payable		5,215.00
	Accounts Payable		27,140.00
	Mortgage Payable (current portion)		2,800.00
	Wages Payable		1,984.00
	Total Current Liabilities			37,139.00
	Long Term Liabilities
	Mortgage Payable			65,200.00
	M. J. Eckland, Capital			59799
	Total Liabilities and Capital			162,138.00
3	Working Capital is sometimes refer to current assets and sometimes current assets less current liabilities, we would consider later part
	Working Capital =	106484-37139		69345
4	Current Ratio = Current Assets/Current Liabilities		106484/37139	2.87