Question & Answer: Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio (AP2-3)…..

Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio (AP2-3) P2-3 LO2-2, 2-4,2-5 Cougar Plastics Company has been operating for three years. At December 31 of last year,the accounting records reflected the following: 22.000 Accounts payable 0 Cash Investments (short-term) Accounts receivable Inventory Notes receivable (long-term) Equipment Factory building Intangibles $15,000 4,000 7,000 47,000 10,000 80,000 31,000 3,000 3,000 Accrued liabilities payable Notes payable (short-term) Long-term notes payable 20,000 1000 Common stock 0,000Additional paid-in capital ,000 Retained carnings 5,000 During the current year, the company had the following summarized activities: a. Purchased short-term investments for $10,000 cash b. Lent $5,000 to a supplier, who signed a two-year note. c. Pu rchased equipment that cost $18,000: paid $5,000 cash and signed a one-year note for the balance. The contract was for $85,000 per year plus options to d. Hired a new president at the end of the year. purchase company stock at a set price based on company performance. e. Issued an additional 2,000 shares of $0.50 par value common stock for $11,000 cash. f. Borrowed $9,000 cash from a local bank, payable in three months. g. Purchased a patent (an intangible asset) for $3,000 cash. h. Built an addition to the factory for $24,000: paid $8,000 in cash and signed a three-year note for the balance. i. Returned defective equipment to the manufacturer, receiving a cash refund of $1,000.