the following Dec 31 year-end adjusted trial balance is forHeath Wilmer Co.The credit balance in Heath Wilmer Owner Capital atthe beginning of the year, January 1, was $320,000. The Owner,Heath Wilmer, invested an additional $300,000 during the currentyear. The land held for future expansion was also purchased duringthe current year.
Heath Wilmer Co. Adjusted
Trial balance December 31
Cash $90,000 Account receceivable 18,000 Prepaid insurance 6,000 Office supplies 2,000 Investments in stocks 150,000 Land held for future expasion 300,000 Office equipment 18,000 Accumulated depreciation-Equipment $4,000 Building 600,000 Accumulated depreciation-Building 170,000 Intangible assets-licensing agreement 50,000 Accounts payable 17,800 Salaries Payable 16,400 Long-term note payable 224,000 Heath Wilmer, Capital 620,000 Health Wilmer, Withdrawals 60,000 Service fees earned 470,800 Salaries expense 180,000 Insurance expense 12,000 Rent expense 25,000 Depreciation expense-Equipment 2,000 Depreciation expense-Building 10,000 Totals $1,523,000 $1,523,000
Required:
1. Prepare a classified year-end balance sheet. (Note: A $22,000installment on the long-term note payable is due within oneyear.)
2. Using the information presented:
(a) Calulate the current ratio. Comment on the ability of HeathWilmer Co. to meets its short-term debts.
(b) Calulate the debt ratio and comment on the financialposition and risk analysis of Heath Wilmer Co.
(c) Using the account balances to analyze the financial positionof Heath Wilmer Co., why would the owner need to invest anadditional $300,000 in the bussiness when the business is alreadyprofitable and the owner had an existing capital balance of$320,000?
the following Dec 31 year-end adjusted trial balance is forHeath Wilmer Co.The credit balance in Heath Wilmer Owner Capital atthe beginning of the year, January 1, was $320,000. The Owner,Heath Wilmer, invested an additional $300,000 during the currentyear. The land held for future expansion was also purchased duringthe current year.
Heath Wilmer Co. Adjusted Trial balance December 31 | ||
---|---|---|
Cash | $90,000 | |
Account receceivable | 18,000 | |
Prepaid insurance | 6,000 | |
Office supplies | 2,000 | |
Investments in stocks | 150,000 | |
Land held for future expasion | 300,000 | |
Office equipment | 18,000 | |
Accumulated depreciation-Equipment | $4,000 | |
Building | 600,000 | |
Accumulated depreciation-Building | 170,000 | |
Intangible assets-licensing agreement | 50,000 | |
Accounts payable | 17,800 | |
Salaries Payable | 16,400 | |
Long-term note payable | 224,000 | |
Heath Wilmer, Capital | 620,000 | |
Health Wilmer, Withdrawals | 60,000 | |
Service fees earned | 470,800 | |
Salaries expense | 180,000 | |
Insurance expense | 12,000 | |
Rent expense | 25,000 | |
Depreciation expense-Equipment | 2,000 | |
Depreciation expense-Building | 10,000 | |
Totals | $1,523,000 | $1,523,000 |
Required:
1. Prepare a classified year-end balance sheet. (Note: A $22,000installment on the long-term note payable is due within oneyear.)
2. Using the information presented:
(a) Calulate the current ratio. Comment on the ability of HeathWilmer Co. to meets its short-term debts.
(b) Calulate the debt ratio and comment on the financialposition and risk analysis of Heath Wilmer Co.
(c) Using the account balances to analyze the financial positionof Heath Wilmer Co., why would the owner need to invest anadditional $300,000 in the bussiness when the business is alreadyprofitable and the owner had an existing capital balance of$320,000?