P2 3 Recording Transactions in T Accounts, Preparing the Balance Sheet, and Evaluating the Current Ratio LO2, 4, 5
[The following information applies to the questions displayed below.]
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Cougar Plastics Company has been operating for three years. At December 31, 2011, the accounting records reflected the following: |
| Cash | $ | 21,000 | Intangibles | $ | 4,500 | |
| Investments (short term) | 3,200 | Accounts payable | 13,000 | |||
| Accounts receivable | 4,400 | Accrued liabilities payable | 2,100 | |||
| Inventory | 32,000 | Notes payable (short term) | 7,700 | |||
| Notes receivable (long term) | 1,900 | Long term notes payable | 48,000 | |||
| Equipment | 42,000 | Contributed capital | 102,000 | |||
| Factory building | 106,000 | Retained earnings | 42,200 | |||
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During the year 2012, the company had the following summarized activities: |
| a. | Purchased short term investments for $8,100 cash. |
| b. | Lent $6,100 to a supplier who signed a two year note . |
| c. |
Purchased equipment that cost $25,000; paid $5,100 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 $82,000 per year plus options to purchase company stock at a set price based on company performance. |
| e. | Issued an additional 2,900 shares of capital stock for $16,000 cash. |
| f. | Borrowed $18,000 cash from a local bank, payable in three months. |
| g. |
Purchased a patent (an intangible asset) for $1,700 cash. |
| h. |
Built an addition to the factory for $21,000; paid $7,400 in cash and signed a three year note for the balance. |
| i. |
Returned defective equipment to the manufacturer, receiving a cash refund of $3,500. |
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