An alphabetical list of the adjusted trial balance accounts for North Country Rentals after its first year

Question:

An alphabetical list of the adjusted trial balance accounts for North Country Rentals after its first year of operations ending March 31, 2020, is shown below:

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Required

1. Calculate the capital balance as it would appear on the March 31, 2020, balance sheet.

2. Prepare a classified balance sheet. Assume that $215,000 of the Long-Term Notes Payable will be paid during the year ended March 31, 2021. Also, $55,000 of the notes receivable will be collected by March 31, 2021.

3. Calculate the current ratio and the debt to equity ratio (round to two decimal places). Analysis Component: North Country shows an adjusted balance in the Long Term Notes Payable account of $362,000 at March 31, 2020. Review the balance sheet just prepared and make a reasonable assumption about what the $362,000 was most logically used for by North Country. Explain whether or not this is generally considered a good use of borrowed funds and why.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Fundamental Accounting Principles Volume I

ISBN: 978-1260305821

16th Canadian edition

Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann

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