solution to selected suggested practice excercises midterm 1

solution to selected suggested practice excercises midterm...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Solutions to selected suggested practice exercises-Midterm 1 P2–3. Req. 1 and 2 Cash Short-Term Investments Accounts Receivable Beg. 35,000 Beg. 3,000 Beg. 5,000 (b) 20,000 10,000 (a) (d) 15,000 (e) 20,000 10,000 (c) (i) 2,000 15,000 (d) End. 18,000 End. 5,000 6,000 (f) 15,000 (g) Inventory Long-Term Note Receivable Beg. 40,000 Beg. 2,000 (c) 10,000 End. 21,000 End. 40,000 End. 12,000 Equipment Factory Building Intangibles Beg. 80,000 Beg. 150,000 Beg. 5,000 (a) 30,000 2,000 (i) (g) 42,000 (f) 6,000 End. 108,000 End. 192,000 End. 11,000 Accounts Payable Accrued Liabilities Payable Short-Term Note Payable 25,000 Beg. 3,000 Beg. 12,000 Beg. 20,000 (a) 20,000 (e) 25,000 End. 3,000 End. 52,000 End. Long-Term Note Payable Contributed Capital Retained Earnings 80,000 Beg. 150,000 Beg. 50,000 Beg. 27,000 (g) 20,000 (b) 107,000 End. 170,000 End. 50,000 End.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
P2–3. (continued) Req. 3 No effect was recorded for (h) . The agreement in (h) involves no exchange or receipt of cash, goods, or services and thus is not a transaction. Req. 4 Peters Plastics Company Balance Sheet At December 31, 2008 Assets Liabilities Current Assets Current Liabilities Cash $ 21,000 Accounts payable $ 25,000 Short-term investments 18,000 Accrued liabilities payable 3,000 Accounts receivable 5,000 Short-term note payable 52,000 Inventory 40,000 Total Current Liabilities 80,000 Total Current Assets 84,000 Long-term note payable 107,000 Total Liabilities 187,000 Long-term note receivable 12,000 Equipment 108,000 Stockholders’ Equity Factory building 192,000 Contributed capital 170,000 Intangibles 11,000 Retained earnings 50,000 Total Stockholders’ Equity 220,000 Total Assets $407,000 Total Liabilities & Stockholders’ Equity $407,000 Req. 5 Financial = Average Total Assets = ($320,000+$407,000) / 2 = $363,500 = 1.73 Leverage Average Stockholders’ Equity ($200,000+$220,000) / 2 $210,000 This ratio indicates that, for every $1 of equity investment, Peters Plastics maintains $1.73 of assets, with the additional $0.73 of assets financed by debt. The company utilizes more equity than debt to finance assets.
Background image of page 2
P2–4. Transaction Type of Activity Effect on Cash (a) I (b) F + (c) I (d) I (e) F + (f) I (g) I (h) NE NE (i) I + P2–5. Req. 1 a. Cash (+A). ........................................................................... 200 Contributed capital (+SE). .............................................. 200 b. Cash (+A). ........................................................................... 30 Long-term liabilities (+L) . ............................................... 30 c. Long-term investments (+A). ............................................... 2,600 Short-term investments (+A) . ............................................. 10,400 Cash ( - A). ...................................................................... 13,000
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/05/2011 for the course ACCT 301 taught by Professor Hasan during the Fall '09 term at George Mason.

Page1 / 16

solution to selected suggested practice excercises midterm...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online