Cougar Plastics Company has been operating for three years. At December 31, 2014,
accounting teacher (Not rated)
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P2-3 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.
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.)
Required:
4 Prepare a trial balance at December 31, 2015.
Required:
5 Prepare a classified balance sheet at December 31, 2015.
Required:
6 Compute the current ratio for 2015.
10 years ago
Cougar Plastics Company has been operating for three years. At December 31, 2014,
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cf_unit1_p2-3_cougar_plastics.xls
