In: Accounting
East Hill Home Healthcare Services was organized by four friends
who each invested $10,000 in the company and, in turn, was issued
8,000 shares of $1.00 par value stock. To date, they are the only
stockholders. At the end of the last year, the accounting records
reflected total assets of $700,000 ($50,000 cash; $500,000 land;
$50,000 equipment; and $100,000 buildings), total liabilities of
$200,000 (short-term notes payable of $100,000 and long-term notes
payable of $100,000), and stockholders’ equity of $500,000 ($20,000
of common stock, $80,000 of additional paid-in capital, and
$400,000 retained earnings). During the current year, the following
summarized events occurred:
Required:
1. Was East Hill Home Healthcare Services organized as a sole proprietorship, a partnership, or a corporation?
Sole proprietorship | |
Partnership | |
Corporation |
2. During the current year, the records of the company were inadequate. You were asked to prepare the summary of the preceding transactions. To develop a quick assessment of their economic effects on East Hill Home Healthcare Services, you have decided to complete the tabulation that follows and to use plus (+) for increases and minus (−) for decreases for each account. The first event is used as an example.
4. Based only on the completed tabulation, provide the following amounts:
5. Compute the current ratio for the current
year. (Round your answer to 2 decimal
places.)