80.2K

Verified Solution

Link Copied!

RR Company (RRC) has been operating for three years. The beginning account balances are Cash $ 35,000 Accounts Receivable 5,000 Inventory 40,000 Supplies 5,000 Notes Receivable (due in three years) 2,000 Equipment 80,000 Buildings 120,000 Land 30,000 Accounts Payable 37,000 Notes Payable (due in three years) 80,000 Common Stock 150,000 Retained Earnings 50,000 During the year, the company had the following summarized activities: a. Purchased equipment that cost $21,000; paid $5,000 cash and signed a two-year note for the balance. b. Issued an additional 2,000 shares of common stock for $20,000 cash. c. Borrowed $50,000 cash from a local bank, payable June 30, in two years. d. Purchased supplies for $4,000 cash. e. Built an addition to the factory buildings for $41,000; paid $12,000 in cash and signed a three-year note for the balance. f. Hired a new president to start January 1 of next year. The contract was for $95,000 for each full year worked. Requirments 1. Analyze transactions (a)-(f) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.) Assets Liabilities Stockholders' Equity a. b. C. d. e. f. 2. Record the transaction entries in the journal of RRC 3. Summarize the journal entries using T-accounts. TIP: Enter the December 31, balances as the month's beginning balances. Cash Accounts Receivable Beg. Bal Beg Bal End. Bat. End. Bal Inventory Supplies Beg. Bal. Beg Bal End. Bal End bal Equipment Buildings Beg. Bal Beg Bal End. Bal End Bal Notes Receivable Land Beg. Bal Beg Bal End. Bal. End. Bal Accounts Payable Notes Payable Beg Bal Beg Bal End. Bal. End. Bal Common Stock Retained Earnings Beg Bal Beg Bad End. Bol End. Bu 4. Prepare the trial Balance at December 31. 5-Prepare a classified balance sheet at December 31. 6-As of December 31, has the financing for RRC's investment in assets primarily come from liabilities or stockholders' equity? 7-Compute the current ratio. Interpret the result

Answer & Explanation Solved by verified expert

See Answer