Question

s 31,900 Accounts payable Cougar Plastics Company has been operating for three years At December 31 of last year, the sccounting records refected the folowing 31,000 2,800 Accrued labäites payable Accounts receivable Equipment
31,800 Accounts payble b. Lent $5,600 to a supplier who signed a two-year note. c Purchased equipment that cost $28.000; paid $5.900 cash and signed a one 60.800 d Hired a new president at the end of the year. The contract was for $78,000 per year plus options to purchase company stock at a set price based on compeny e Issued an additional 1,800 shares of $0 50 par value common stock for $13,000 t Borrowed $17000 cash from a local bank, peyable in three months g. Purchased a patent (an intangible asset) for $2,500 cash h Built an addtion to the factory for $28,000: paid $7,800 in cash and signed a $3.000.
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Answer #1

Ans- The balance sheet is correct there may be an analysis of the balance sheet in the form of current ratio.

Current Ratio= Current Assets/ Current Liabilities

= $77,200/$60,800

=1.27 or 1.3

Explanation -

This ratio indicates that the Cougar Plastics has relatively low liquidity, for every $1 of current liabilities, company maintains only $1.27 of current assets.

OR

It may be related transaction D

No effect was recorded for (d). The agreement in (d) involves no exchange or receipt of cash, goods or services and thus it is not a transaction.

Is both sides of balance sheet are same that there cannot be any doubt.

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