just need part b answered Drake received $80,000 in advance for a construction p
ID: 2370596 • Letter: J
Question
just need part b answered
Drake received $80,000 in advance for a construction project on April 15, 2012. The receipt of cash was properly recorded on April 15. As of 12/31/12, 40% of this has been earned. (What is the entry on 12/31/12?) Paid a supplier of construction supplies S24,000 for goods previously purchased on account Entered into a one-year commitment to buy all lumber from a supplier at a price 10% below market. The estimated cost over the next year is $500,000. On October 1, Drake Builders borrows $50,000 from National Bank on a 6-month, $50,000, 4% note. What entry must Drake Builders, Inc. make on December 31 before financial statements are prepared? INSTRUCTIONS: Prepare journal entries for each transaction (list identifying letter, then the accounts and amounts debited and credited- in good form. Be sure to pay attention to whether a liability is short-term or long-term). If no entry is required for and item, explain why. B. Assuming that Drake Builders had a positive current ratio, how would transactions 5, 6, 7, and 8 above affect the amount of working capital and the current ratio (do each Transaction analysis independent of the other)? Will the amounts increase (I), decrease (D), or not be affected (NE). (use format below) Entry Working Capital Current RatioExplanation / Answer
ENtry Wrkg Cap CR
-------------------------------------
5 NE Increase
6 NE NE
7 NE NE
8 INC NE
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