Question

In: Accounting

Listed in random order are the items to be included in the balance sheet of Tri-State...

Listed in random order are the items to be included in the balance sheet of Tri-State Lodge at December 31, year 1.

Equipment $;10,800 Buildings $;516,000
Land 168,000 Capital Stock ?
Accounts Payable 32,880 Cash 10,920
Accounts Receivable 3,960 Furnishings 27,120
Salaries Payable 15,840 Notes Payable 260,400
Interest Payable 4,800 Retained Earnings 270,480

Instructions

  1. Prepare a balance sheet at December 31, year 1. Include a proper heading and organize your balance sheet similar to the illustrations shown in Chapter 2. You will need to compute the amount to be shown for Capital Stock.

  2. Assume that no payment is due on the notes payable until year 3. Does this balance sheet indicate that the company is in a strong financial position as of December 31, year 1? Explain briefly.

Solutions

Expert Solution

Total debit
Equipment $       10,800
Land $     168,000
Accounts Receivable $         3,960
Buildings $     516,000
Cash $       10,920
Furnishings $       27,120
Total Debit $        736,800
Total Credit Without Capital Stock
Accounts Payable $       32,880
Salaries Payable $       15,840
Interest Payable $         4,800
Notes Payable $     260,400
Retained Earnings $     270,480
Total Credit Without Capital Stock $        584,400
Total Debit $        736,800
Total Credit Without Capital Stock $        584,400
Capital Stock $        152,400
Tri-State Lodge
Balance sheet
December 31, year 1
Assets Liabilities & owner's equity
Cash $          10,920 Liabilities:
Accounts Receivable $            3,960 Accounts Payable $       32,880
Equipment $          10,800 Salaries Payable $       15,840
Furnishings $          27,120 Interest Payable $         4,800
Buildings $        516,000 Notes Payable $     260,400
Land $        168,000 Owner's equity
Capital Stock $        152,400
Retained Earnings $     270,480
$        736,800 $        736,800
Assume that no payment is due on the notes payable until year 3. Does this balance sheet indicate that the company is in a strong financial position as of December 31, year 1? Explain briefly.
Accounts Payable $       32,880
Salaries Payable $       15,840
Interest Payable    $         4,800
Current liabilities $          53,520
Cash $          10,920
Accounts Receivable $            3,960
Current assets $          14,880
No,
The company has week financial position. The company have total current assets $14,880 and total current liabilities $53520. Therefore, the company has less current assets to meet its current liabilities. Thus, the company is not a strong financial position.

ekkarill92 answered 1 year ago
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