Question

Based on your financial statements for Business Solutions answer the following questions: Does Business Solutions have enough cash to pay its liabilities? Please list the amounts and the overage amount or shortfall. Does Business Solutions need to improve this situation? If not, please describe what they are doing correctly, if so, please describe how they may improve. Business Solutions Unadjusted Trial Balance Adjusted Trial Balance | Post-Closing Trial Balance Credit Credit Credit Debit 52 014 5768 4445 1980 3220 8500 Debit 50 614 5 768 640 1 485 805 8500 Debit 50 614 5 768 640 1 485 805 8500 425 425 22 000 22 000 22 000 1375 1 375 1 800 December 31, 2018 Account Cash Accounts receivable Computer supplies Prepaid insurance Prepaid rent Office equipment Accumulated depreciation-Office equipment Computer equipment Accumulated depreciation-Computer equipment Accounts payable Wages payable Unearned computer services revenue Common stock Retained earnings Dividends Computer services revenue Depreciation expense-Office equipment Depreciation expense-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses Repairs expense-Computer Income Summary 1 800 420 1 600 68 000 1 600 68 0001 1 800 420 1 600 68 000 16192 6000 7400 40259 40259 425 2830 1 375 3250 495 2415 3 805 2678 759 250 1215 2678 759 250 1215 Totals 111 659 111 659 113 879 113 879 89 812 89 812

Answer 1

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Business Solutions

To know if the company has ability to pay off its debts we have to check cash available and liabilities standing in books.

Cash Available	Amount $
Cash	50,614.00
Cash Available	50,614.00
Current Liabilities	Amount $
Accounts Payable	1,800.00
Wages Payable	420.00
Unearned service Revenue	1,600.00
Current Liabilities	3,820.00
Overage amount	46,794.00
(Cash Available less Current Liabilities)

The company will have surplus of $ 46,794 after paying all its liabilities. So the situation is much better.

What are they doing correctly?

The company's accounts receivable is very less. It means it is either doing mostly cash transactions or regularly following up with their customers for money. It has excess cash and that is good as the company is highly liquid.