Question

Prepare a Balance Sheet with an ending date of July 31, 2020 based on the following information:

1) marketable security                                           26480

2). Scholarship fund 121947

3) Customers owe 25000

4) Building has 8 yea service life

5) land sold at 13% over market value

6) Furniture bought February 1,2020 16000

7) cash equals sell of land

8) Note receivable 54000

9) Insurance bought for 3 years July 1, 2017      100000

10) 20% of customer debt not collectible

11) land appreciates at 7 ½% each year

12) building bought August 1, 2019 720000

13) patent royalty 55,000

14) land purchased January 1, 2017 2,500,000

15) Furniture 4 year service life

16) copyright 17432

17) equipment purchased April 1, 2018 340,000

18) purchase of supplies 97104

19) common @ 113/each

20) wages 16247

21) preferred@ 226/each

22) retained earnings 2456789

23) equipment 20 year service life

24) commissions 87009

25) long term loan 1165430

26) common sold 255 shares

27) building mortgage 612866

28) preferred sold 357 shares

29) taxes owed 6700 + 1% land purchase

30) note payable 1/6 of note receivable

31 )merchandise inventory 3470

II.Using the information from your balance sheet calculate the following;

A] Current ratio. Is that ratio favorable? Explain/

Answer 1

Bifurcation in Balance Sheet of the following Items would be as follows:

Liabilities	Amount	Assets	Amount
Coomon 113/ each 255 shares	28,815	Marketable Scurities	26,480
Preference Shares 357 shares 226 each	80682	Customers Owe = 25,000 Less : Bad debts 20% on 25000 = 5000	20,000
Retained Earnings	2456789
Long term loans	1165430	Notes Receivables	54,000
Notes Payable	9,000	Patent Royalty	55,000
Building Mortgage	612866	Copyright	17,432
Scolarship Fund	121947	Merchandise Inventory	3470
		Cash	36,61,721
		Equipment = 323,000 Less Depreciation = 17,000	306,000
		Furniture = 16000 Less : Depreciation = 2,000	14000
		Building = 720,000 Less : Dep = 720,000 /8 = 90000	630,000

1. Land Purchased on Jan 1 , 2017 = 25,00,000

Add: Appreciation = 7.5% for 7 months = 109375

Value of land on July 31, 2017 = 26,09,375

Add : Appreciation 7.5 % = 195703

Vlue of land on July 31, 2018 = 28,04,078

Add: Appreciation 7.5% = 210305

Value of land on July 31, 2019 = 3014383

Add Appreciation = 7.5% = 226078

Value of land on July 31, 2020 = 3240461

Sold 13% over marekt value = 421260

Cash in Balance Sheet = 3661721

2. WDV of Equipment

Purchase Price on Apr 1, 2018 = 340,000

Less Dep 17000

Value on July, 2019 = 323,000

Less : Dep = 17000

Value on July 31, 2020 = 306,000

3. Furniture = 16,000

Less Depreciation 16000 / 4 = 4000 for 6 months = 2000

Current Ratio = Current Assets / Current Liabilities

Current Assets = 26,480 + 20,000 + 3470 + 36,61,721 = 3711671

Current Liabilities = 9,000

Current Ratio = 3711671 / 9000

= 412.40:

Ideal Current Ratio = 2:1