Cougar Plastics Company has been operating for three years A

Cougar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following Cash Investments (short-term) Accounts receivable Inventory Notes receivable (long-term) Equipment Factory building Intangibles $20,000 Accounts payable $18,000 2,700 6,300 48,000 10,300 92,700 32,800 2,600 3,300 Accrued liabilities payable Notes payable (short-term) Notes payable (long-term) 29,000 2,600 Common stock 59,000 Additional paid-in capital 90,000 Retained earnings 4,300 During the current year, the company had the following summarized activities: a. Purchased short-term investments for $8,600 cash. b. Lent $6,700 to a supplier who signed a two-year note c. Purchased equipment that cost $25,000; paid $5,200 cash and signed a one-year note for the balance d. Hired a new president at the end of the year. The contract was for $78,000 per year plus options to purchase company stock at a set price based on company performance e. Issued an additional 2,000 shares of $0.50 par value common stock for $19,000 cash. f Borrowed $12,000 cash from a local bank, payable in three months. g. Purchased a patent (an intangible asset) for $3,000 cash. h. Built an addition to the factory for $21,000; paid $8,200 in cash and signed a three-year note for the balance i. Returned defective equipment to the manufacturer, receiving a cash refund of $1,200.

Solution

COUGAR PLASTICS COMPANY

Balance Sheet

Assets

Liabilities

Current Assets;

Current liabilities;

Cash

$20500

Accounts payable

$18000

Investments (Short-term)

$11200

Accrued liabilities payable

$2700

Accounts receivable

$3300

Note payable (short-term)

$26100

Inventory

$29000

Bank loan

$12000

Total current assets

$64000

Total current liabilities

$58800

Non-Current Assets;

Non-current liabilities;

Note receivable (long-term)

$9300

Note payable (long-term)

$60800

Equipment

$82800

Total non-current liabilities

$60800

Factory building

$111000

Total liabilities

$119600

Intangible assets

$7300

Stockholders’ Equity;

Total non-current assets

$210400

Common stock

$11300

Additional paid-in capital

$110700

Retained earnings

$32800

Total stockholders’ equity;

$154800

Total assets

$274400

Total liabilities and stockholders’ equity;

$274400

1. Balance of cash is calculated as follow;

($20000 + $19000 + $12000 + $1200 – $8600 – $5200 – $3000 – $8200 - $6700) = $20500

2. Short-term investment ($2600 + $8600) = $11200

3. Note receivable (long-term) ($2600 + $6700) = $9300

4. Equipment ($59000 + $25000 – $1200) = $82800

5. Factory building ($90000 + $21000) = $111000

6. Intangible assets ($4300 + $3000) = $7300

7. Note payable (long-term) ($48000 + $12800) = $60800

8. Note payable (short-term) ($6300 + $19800) = $26100

9. Common stock ($10300 + $1000) = $11300

10. Additional paid-in capital ($92700 + $18000) = $110700

COUGAR PLASTICS COMPANY
Balance Sheet
Assets		Liabilities
Current Assets;		Current liabilities;
Cash	$20500	Accounts payable	$18000
Investments (Short-term)	$11200	Accrued liabilities payable	$2700
Accounts receivable	$3300	Note payable (short-term)	$26100
Inventory	$29000	Bank loan	$12000
Total current assets	$64000	Total current liabilities	$58800
Non-Current Assets;		Non-current liabilities;
Note receivable (long-term)	$9300	Note payable (long-term)	$60800
Equipment	$82800	Total non-current liabilities	$60800
Factory building	$111000	Total liabilities	$119600
Intangible assets	$7300	Stockholders’ Equity;
Total non-current assets	$210400	Common stock	$11300
		Additional paid-in capital	$110700
		Retained earnings	$32800
		Total stockholders’ equity;	$154800
Total assets	$274400	Total liabilities and stockholders’ equity;	$274400