P23 Recording Transactions in TAccounts Preparing a Statemen

P2-3 Recording Transactions in T-Accounts, Preparing a Statement of Financial Position from a Trial Balance, and Evaluating the Current Ratio LO2-6 Injection Plastics Company has been operating for three years. At December 31, 2017, the accounting records reflected the following $ 28,000 Intangibles 3,400 Accounts payable 4400 Accrued liabilities Accounts receivable Notes receivable (ong-term) Factory building 3.400 31,000 Short-term bonrowings 2,400 Notes payable (long-term) 55,000 104,000 55,000 Contributed capital 97,000 Retained eamings During the year 2018, the following summarized transactions were completed: a. Purchased equipment that cost $20,800; paid $7,400 cash and signed a one-year note for the balance b. Issued 3,400 addtional shares for $20,400 cash a Lent $8.400 to a manager, who signed a two-year note. d. Purchased short-term investments for $10,400 in cash. e. Pald $6,400 on the note in transaction (a). Borrowed $13,400 cash on December 31, 2018, from the bank and signed note, payable June 30, g. Purchased a patent (an intangble asset) for $4,400 cash. h. Built an addition to the factory for $29,200; paid $10,400 in cash and signed a three-year note for the Hired a new president at the end ofthe year. The contract was for $92,000 per year plus options to purchase company shares at a set price based on company performance. J Retumed defective equipment to the manufacturer, receiving a cash refund of $2.400 1&2. Post the T-accounts for each of the accounts on the statement of financial position and enter the balances at the end of 2017 as beginning balances for 2018.

Solution

Answer 1 & 2. Cash Investment (short-term) Accounts Receivable Beg. Bal.        28,000.00         7,400.00 a. Beg. Bal.          3,400.00 Beg. Bal.         4,400.00 b.        20,400.00         8,400.00 c. d.        10,400.00 f.        13,400.00      10,400.00 d. j.          2,400.00         6,400.00 e.         4,400.00 g.      10,400.00 h. End. Bal.        16,800.00 End. Bal.        13,800.00 End. Bal.         4,400.00 Inventories Notes Receivable (long Term) Equipment Beg. Bal.        31,000.00 Beg. Bal.          2,400.00 Beg. Bal.      55,000.00          2,400.00 j. c.          8,400.00 a.      20,800.00 End. Bal.        31,000.00 End. Bal.        10,800.00 End. Bal.      73,400.00 Factory Building Intangibles Accounts Payable Beg. Bal.        97,000.00 Beg. Bal.          4,400.00 Beg. Bal.        16,400.00 h.        29,200.00 g.          4,400.00 End. Bal.     126,200.00 End. Bal.          8,800.00 End. Bal.        16,400.00 Accrued Liabilities Short-Term Borrowings Notes Payable (long term) Beg. Bal.         3,400.00 Beg. Bal.          8,400.00 Beg. Bal.        55,000.00 e.          6,400.00        13,400.00 a.        13,400.00 f.        18,800.00 h. End. Bal.         3,400.00 End. Bal.        15,400.00 End. Bal.        87,200.00 Contributed Capital Retained Earnings Beg. Bal.    104,000.00 Beg. Bal.        38,400.00      20,400.00 b. End. Bal.    124,400.00 End. Bal.        38,400.00 Answer 4. INJECTION PLASTICS COMPANY Trial Balance At Dec 31, 2016 Accounts Title Debits Credits Cash          16,800.00 Investment (short-term)          13,800.00 Accounts Receivable            4,400.00 Inventories          31,000.00 Notes Receivable (long Term)          10,800.00 Equipment          73,400.00 Factory Building        126,200.00 Intangibles            8,800.00 Accounts Payable          16,400.00 Accrued Liabilities            3,400.00 Short-Term Borrowings          15,400.00 Notes Payable (long term)          87,200.00 Contributed Capital        124,400.00 Retained Earnings          38,400.00 Total        285,200.00        285,200.00 Answer 5. INJECTION PLASTICS COMPANY Statement of Financial Position As at Dec 31, 2018 Assets Liabilities Current Assets Current Liabilities Cash      16,800.00 Accounts Payable      16,400.00 Accounts Receivable        4,400.00 Accrued Liabilities        3,400.00 Inventories      31,000.00 Short-Term Borrowings      15,400.00 Investment (short-term)      13,800.00 Total Current Liabilities      35,200.00 Total Current Assets      66,000.00 Noncurrent Liabilities Noncurrent Assets Notes Payable (long term)      87,200.00 Notes Receivable (long Term)      10,800.00 Equipment      73,400.00 Total Liabilities    122,400.00 Factory Building    126,200.00 Intangibles        8,800.00 Shareholders\' Equity Contributed Capital    124,400.00 Total Noncurrent Assets    219,200.00 Retained Earnings      38,400.00 Total Shareholders\' Equity    162,800.00 Total Assets    285,200.00 Total Liabilities & Shareholders Equity    285,200.00 Answer 6. Current Ratio = Current Assets / Current Liabilities Current Ratio = $66,000 / $35,200 Current Ratio = 1.88 : 1