Question

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 End. Bal. 13,000 End. Bal. 12,000 Accounts Receivable Inventory Beg. Bal. 3,000 Beg. Bal. 20,000 End. Bal. 3,000 End. Bal. 20,000 Notes Receivable (long-term) Equipment Beg. Bal. 1,000 Beg. Bal. 50,000 End. Bal. 1,000 End. Bal. 50,000 Factory Building Intangibles Beg. Bal. 90,000 Beg. Bal. 5,000 End. Bal. 90,000 End. Bal. 5,000 Accounts Payable Accrued Liabilities Payable Beg. Bal. 15,000 Beg. Bal. 4,000 End. Bal. 15,000 End. Bal. 4,000 Notes Payable (short-term) Long-Term Notes Payable Beg. Bal. 7,000 Beg. Bal. 47,000 End. Bal. 7,000 End. Bal. 47,000 Common Stock Additional Paid-in Capital Beg. Bal. 10,000 Beg. Bal. 80,000 End. Bal. 10,000 End. Bal. 80,000 Retained Earnings Beg. Bal. 31,000 End. Bal. 31,000 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 $- $- 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 - 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

Answer 1

Notes: For transcations d there is no entry required
For transcation [e] common stock is 2,000*0.5 =1,000 and rest of the amount was (11,000-1,000) is additional paid in capital