question 1
2. Cash + equipment = notes payable + common stock
Ending Balance 70500 + 29000 = 73500 + 26000
3. Liabilities , most of the financing in assets come from liabilities which is of $73500 for by adding four transaction amount , whereas stockholder’s equity is $26000
question 2.
1.
|
Assets |
= |
liabilities |
+ |
stockholder’s equity |
|
cash |
equipment |
|
Accounts payable |
ST notes payable |
LT notes payable |
|
common stock |
| Beg. |
0 |
0 |
|
0 |
0 |
0 |
|
0 |
| a |
42000 |
0 |
|
0 |
0 |
0 |
|
42000 |
| b |
15000 |
0 |
|
0 |
0 |
15000 |
|
0 |
| c |
0 |
0 |
|
0 |
0 |
0 |
|
0 |
| d |
(3000) |
6000 |
|
0 |
3000 |
0 |
|
0 |
| e |
(12000) |
24000 |
|
12000 |
0 |
0 |
|
0 |
3. Journal entries
| Date |
General jounral |
Debit |
Credit |
| a |
Cash |
42000 |
|
|
To common stock |
|
42000 |
|
|
|
|
| b |
cash |
15000 |
|
|
To LT notes payable |
|
15000 |
|
|
|
|
| c |
No entry required |
|
|
|
|
|
|
| d |
Equipment |
6000 |
|
|
To cash |
|
3000 |
|
To ST notes payable |
|
3000 |
|
|
|
|
| e |
Equipment |
24000 |
|
|
To cash |
|
12000 |
|
To Accounts payable |
|
12000 |
|
|
|
|
4. Balance Sheet
| Assets |
|
Liabilities |
|
| cash |
42000 |
Accounts payable |
12000 |
| Equipment |
30000 |
ST notes payable |
3000 |
|
|
LT notes payable |
15000 |
|
|
Total liabilities |
30000 |
|
|
|
|
|
|
|
|
|
|
Shareholder’s equity |
|
|
|
Common stock |
42000 |
|
|
Retained earnings |
0 |
| Total Assets |
$72000 |
Total Liabilities and Shareholder’s equity |
$72000 |
5.
|
Current ratio |
september 30,2013 |
|
December 31 ,2012 |
|
| Numerator |
Current assets |
|
1180200 |
4.36 |
|
1122600 |
4.45 |
| Denominator |
Current liabilities |
|
270700 |
|
252100 |
|
|
|
|
|
|
|
|
|
2-a. Decrease , from current ratio of 2012 that is 4.45 to 4.36 in 2013, this change will be considered as decrease in current ratio
2-b. decreased ability to pay current liabilities , decrease in current ratio implies difficulty in paying off short term liabilities with current assets
3-a
|
Current ratio |
|
|
| Numerator |
Current assets |
|
1180200 – cash of $10000 =$1170200 |
4.49 |
| Denominator |
Current liabilities |
270700 – Accounts payable of $10000 =260700 |
3-b. Increase the current ratio , from current ratio of 4.46 to 4.49 shows increase in it.
4. Stockholder’s equity , Company’s total assets are primarily financed by stockholder;s equity of $1219800, whereas the total liabilities is $314500
question 6
2.
|
Assets |
= |
Liabilities |
+ |
Stockholders’ equity |
|
cash |
supplies |
land |
building |
euipment |
|
Notes payable |
|
Common stock |
Retained Earnings |
| Beginning |
0 |
0 |
0 |
0 |
0 |
|
0 |
|
0 |
0 |
| a |
50000 |
0 |
0 |
0 |
0 |
|
0 |
|
50000 |
0 |
| b |
(14750) |
0 |
37200 |
89750 |
31250 |
|
143450 |
|
0 |
0 |
| c |
0 |
0 |
0 |
0 |
0 |
|
0 |
|
0 |
0 |
| d |
(5300) |
5300 |
0 |
0 |
0 |
|
0 |
|
0 |
0 |
| e |
12400 |
0 |
(12400) |
0 |
0 |
|
0 |
|
0 |
0 |
| Ending |
42350 |
5300 |
24800 |
89750 |
31250 |
|
143450 |
|
50000 |
0 |
4.
| a |
Total assets at the end of the month |
193450 |
| b |
Total liabilities at the end of the month |
143450 |
| c |
Total stockholder’s equity at the end of the month [common stock + retained earnings] |
50000 |
| d |
cash balance at the end of the month |
42350 |
| e |
Total current assets at the end of the month [cash +supplies] |
47650 |
5. Liabilities , ABT’s investment in assets primarily come from liabilites (Notes payable) of $143450, whereas the stockholder’s equity is of $50000.
