The following information is provided for Restoration, Inc. at December 31, 2016: Monthly Account Balances (in...
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The following information is provided for Restoration, Inc. at December 31, 2016: Monthly Account Balances (in thousands of dollars) Accounts payable Balance $ 7,750 Accounts receivable 6,440 Accrued wages payable 3,600 Cash 20,000 Common stock 14,600 Dividends payable 1,500 Interest payable 1,100 Interest receivable 50 Investments 2,660 Land 5,000 Long-term notes payable (due June 15, 2018) 4,000 Prepaid expenses 1,800 Other noncurrent assets 800 Plant and equipment 15,200 Retained earnings 10,400 Short-term notes payable 11,000 Supplies 2,000 Restoration entered into the following transactions during January 2017: 1. Paid wages owed at December 31, 2016. 2. Collected $5,500 on outstanding accounts receivable. 3. Paid accounts payable of $7,000. 4. Issued 1000 shares of common stock for $8 each. 5. Paid $11,000 on a short-term note payable including $750 of accrued interest. 6. Purchased supplies worth $1,850 on account. 7. Signed a contract with a new cleaning company. Agreed to pay $1,500 a month for cleaning the shop each night. 8. Redeemed a six-month $2,660 certificate of deposit held as an investment. Proceeds including accrued interest totaled $2,710. 9. Purchased shop equipment in exchange for $8,000 in cash and a note payable of $15,000 due 8/31/18. Required: a. Prepare the journal entry for each transaction. b. Create T-accounts with beginning balances. Post each journal entry to the appropriate T- account. Create new accounts as necessary. c. Prepare comparative balance sheets at December 31, 2016 and January 31, 2017 in proper form. d. Compute the current ratio at December 31, 2016 and Janaury 31, 2017. Has liquidity improved or deteriorated? The following information is provided for Restoration, Inc. at December 31, 2016: Monthly Account Balances (in thousands of dollars) Accounts payable Balance $ 7,750 Accounts receivable 6,440 Accrued wages payable 3,600 Cash 20,000 Common stock 14,600 Dividends payable 1,500 Interest payable 1,100 Interest receivable 50 Investments 2,660 Land 5,000 Long-term notes payable (due June 15, 2018) 4,000 Prepaid expenses 1,800 Other noncurrent assets 800 Plant and equipment 15,200 Retained earnings 10,400 Short-term notes payable 11,000 Supplies 2,000 Restoration entered into the following transactions during January 2017: 1. Paid wages owed at December 31, 2016. 2. Collected $5,500 on outstanding accounts receivable. 3. Paid accounts payable of $7,000. 4. Issued 1000 shares of common stock for $8 each. 5. Paid $11,000 on a short-term note payable including $750 of accrued interest. 6. Purchased supplies worth $1,850 on account. 7. Signed a contract with a new cleaning company. Agreed to pay $1,500 a month for cleaning the shop each night. 8. Redeemed a six-month $2,660 certificate of deposit held as an investment. Proceeds including accrued interest totaled $2,710. 9. Purchased shop equipment in exchange for $8,000 in cash and a note payable of $15,000 due 8/31/18. Required: a. Prepare the journal entry for each transaction. b. Create T-accounts with beginning balances. Post each journal entry to the appropriate T- account. Create new accounts as necessary. c. Prepare comparative balance sheets at December 31, 2016 and January 31, 2017 in proper form. d. Compute the current ratio at December 31, 2016 and Janaury 31, 2017. Has liquidity improved or deteriorated?
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Answer a Answer b Journal Entries Taccounts Date Account Titles Debit Credit Accounts Payable 1 Accrued Wages Payable 3600 Debit Credit Cash 3600 Cash 700000 Balance bd 775000 Supplies 185000 2 Cash 5... View the full answer
Related Book For
Fraud examination
ISBN: 978-0538470841
4th edition
Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma
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