assist you in peparing for exams REQUIRED: Use the following information for the

Question

assist you in peparing for exams REQUIRED: Use the following information for the eight questions which follow. Heather Company has the following account balances after adjusting entries at Dece 31, 2011: Cash Bonds Payable (due 2050) Accounts Payable Dividends Treasury Stock, Common (22,000 shares) Preferred Stock ($10 par) 137,000 100,000 22,000 20,000 98,000 80,000 220,000 8,000 240,000 90,000 400,000 940,000 70,000 720,000 18.000 15,000 95,000 40,000 Paid-in Capital in Excess of Par Value, Preferred Equipment Accounts Receivable Common Stock ($1 par) Sales Merchandise Inventory Cost of Goods Sold Allowance for Doubtful Accounts Operating Expenses Accumulated Depreciation- Equipment Paid-in Capital in Excess of Par Value, Common Retained Earnings (1/1/2011) 27,000 1. The adjusted trial balance on December 31, 2011, would balance at: 2. The net income for the year is: 3.The total owners' equityoon the December 31, 2011balance sheet is: 4. The total assets on the December 31, 2011 balance sheet is: 5. The total current assets on the December 31, 2011 balance sheet is 6·The current ratio on December 31, 2011 is:

Explanation / Answer

Part 1)

The adjusted trial balance on December 31, 2011 is calculated as below:

Adjusted Trial Balance on December 31, 2011 = 137,000 (Cash) + 220,000 (Land) + 240,000 (Equipment) + 90,000 (Accounts Receivable) + 70,000 (Merchandise Inventory) + 95,000 (Operating Expenses) + 98,000 (Treasury Stock) + 720,000 (Cost of Goods Sold) + 20,000 (Dividends) = $1,690,000

_____

Part 2)

The net income for the year is determined as below:

_____

Part 3)

The total owner's equity is calculated as below:

_____

Part 4)

The value of total assets is arrived as follows:

_____

Part 5)

The value of total current assets is determined as below:

_____

Part 6)

The current ratio is calculated as follows:

Current Ratio on December 31, 2011 = Total Current Assets/Total Current Liabilities = 282,000/(22,000 (Accounts Payable) + 18,000 (Unearned Revenue)) = 7.05

Sales 940,000 Less Cost of Goods Sold 720,000 Operating Expenses 95,000 Net Income $125,000

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