${?}^{208}$ Decision Cases

LO $3,6$ C$3-80.($Learning Objectives $3,6$: Adjust the accounts; analyze and evaluate liquidity$)$ The unadjusted trial balance of Stone Park Services, Inc., at January $31,2022,$ does not balance. The list of accounts and their balances follows. The trial balance needs to be prepared and adjusted before the financial statements at January $31,2022,$ can be prepared. The manager of Stone Park Services also needs to know the business's current ratio.

Cash. $q,$

Accounts receivable $q,$

Supplies $q,$

Prepaid rent.. $q,$

Land. $q,$

Accounts payable $q,$

Salary payable $q,$

Unearned service revenue $q,$

Note payable, due in three years $q,$

Common stock $q,$

Retained earnings $q,$

Service revenue $q,$

Salary expense $q,$

Rent expense. $q,$

Advertising expense. $q,$

$$8,000$

$114,200$

$800$

$1,200$

$43,000$

$12,000$

$.1.1$

$0$

$0$

$700$

$23,400$

$5,000$

$9,300$

$9,100$

$3,400$

Supplies expense. $q,$

$0$

$900$

$0$

Requirements

How much out of balance is the trial balance? Notes Payable $($the only error$)$ is understated.

Stone Park Services needs to make the following adjustments at January $31$ :

a$.$ Supplies of $$400$ were used during January.

b$.$ The balance of prepaid rent was paid on January $1$ and covers the entire calendar year of $2022.$ No adjustment was made on January $31.$

c$.$ At January $31,$ Stone Park Services owed employees $$1,000.$

d$.$ Unearned service revenue of $$500$ was earned during January.

Prepare a corrected, adjusted trial balance. Give Notes Payable its correct balance.

$3.$ After the error is corrected and after these adjustments are made, calculate and analyze the current ratio of Stone Park Services, Inc. Analyze this current ratio.