P2-3 Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio LO2-2, 2-4, 2-5
[The following information applies to the questions displayed below.]
Cougar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following:
|Investments (short-term)||2,000||Accrued liabilities payable||3,400|
|Accounts receivable||3,200||Notes payable (short-term)||6,200|
|Inventory||29,000||Notes payable (long-term)||45,000|
|Notes receivable (long-term)||2,500||Common stock||10,600|
|Equipment||51,000||Additional paid-in capital||95,400|
|Factory building||104,000||Retained earnings||43,600|
During the current year, the company had the following summarized activities:
Purchased short-term investments for $7,300 cash.
Lent $5,400 to a supplier who signed a two-year note.
Purchased equipment that cost $25,000; paid $4,300 cash and signed a one-year note for the balance.
Hired a new president at the end of the year. The contract was for $84,000 per year plus options to purchase company stock at a set price based on company performance.
Issued an additional 2,500 shares of $0.50 par value common stock for $16,000 cash.
Borrowed $11,000 cash from a local bank, payable in three months.
Purchased a patent (an intangible asset) for $1,600 cash.
Built an addition to the factory for $25,000; paid $8,700 in cash and signed a three-year note for the balance.
Returned defective equipment to the manufacturer, receiving a cash refund of $1,800.
1. & 2. Post the current year transactions to T-accounts for each of the accounts on the balance sheet. (Two items have been given in the cash T-account as examples).