An alphabetical list of the adjusted trial balance accounts for North Country Rentals after its first year of operations ending March 31, 2014, is shown below:

Account                                                          Adjusted Account balance

Accounts payable.........................................................................................................................................                   $ 9,100

Accumulated depreciation, building.......................................................................................................                    25,000

Accumulated depreciation, furniture......................................................................................................                      3,500

Advertising expense....................................................................................................................................                   16,200

Building...........................................................................................................................................................                 591,000

Cash..................................................................................................................................................................                   17,000

Depreciation expense, building................................................................................................................                   25,000

Depreciation expense, furniture...............................................................................................................                      3,500

Furniture..........................................................................................................................................................                   42,800

Interest expense............................................................................................................................................                    10,260

Interest payable.............................................................................................................................................                          900

Janitorial expense.........................................................................................................................................                   41,000

Land..................................................................................................................................................................                 110,000

Long-term notes payable............................................................................................................................                 362,000

Notes receivable, due 201 7......................................................................................................................                 143,000

Office salaries expense................................................................................................................................                 126,625

Office supplies..............................................................................................................................................                         700

Office supplies expense..............................................................................................................................                      6,100

Patent................................................................................................................................................................                     3,000

Prepaid advertising.......................................................................................................................................                         400

Rent earned.....................................................................................................................................................                398,400

Rent receivable..............................................................................................................................................                   16,000

Salaries payable.............................................................................................................................................                     2,625

Utilities expense...........................................................................................................................................                   36,720

Wyett North, capital....................................................................................................................................                415,780

Wyett North, withdrawals.........................................................................................................................                   28,000

Assume all accounts have a normal balance

Required

1. Calculate the capital balance as it would appear on the March 31, 2014, balance sheet.

2. Prepare a classified balance sheet. Assume that $ 215,000 of the notes receivable will be collected by March 31, 2015.

Analysis component: 

North Country shows an adjusted balance in the long-Term notes payable account of $ 360,000 at March 31, 2014. Review the balance sheet just prepared and makes a reasonable assumption about what the $ 362000 was most logically used for by North Country. Explain whether or not this is generally considered a good use of borrowed funds and why.