Question

Part IV. Preparing Financial Statements Spartan Testing Corporation Trial Balance May 31, 2020 Dr Cr $ 155,560 125,000 12,549 1,000 345,678 101 120 125 140 170 171 190 210 215 217 260 270 $ 12,000 250,000 Cash Accounts Receivable Supplies Inventory Prepaid Insurance Equipment Accumulated Depreciation - Equipment Trademarks Wages Payable Accounts Payable Utilities Payable Deferred Revenue Long Term Debt (see note 2) Common Stock Retained Earnings Dividends Testing Fee Revenue Wages Expense Rent Expense Repairs & Maintenance Expense Supplies Expense Office Expense Miscellaneous Expense 15,989 3,456 3,408 100,000 345,000 140,000 250,568 310 10,455 320,926 320 325 405 510 520 540 546 545 550 175,676 24,345 34,565 7,453 34,566 14,500 $ 1,191,347 1,191,347 Notes: 1. The fiscal year end is May 31, 2020. 2. $14,560 of the Long-Term Debt is a current liability. Assignment Prepare in proper form: 1. The Balance Sheet 2. The Statement of Retained Earnings 3. The Income Statement 4. Calculate and present the Current Ratio 5. Calculate and present Working Capital

Answer 1

Requirement 1:

Spartan Testing Corporation

Balance Sheet

As on May 31, 2020

$ $ $ $ 155,560 125,000 12,549 1,000 294,109 345,6781 12,000 333,678 250,0001 Assets Current Assets Cash Accounts Receivable Supplies Inventory Prepaid Insurance Total Current Assets Non Current Assets Property, Plant and equipment Equipment Less: Accumulated depreciation Property, Plant and equipment, net Trademarks Total non current assets Total Assets Liabilities & Stockholder's Equity Current Liabilities Wages Payable Accounts Payable Utilities Payable Deferred Revenue Current portion of Long term debt Total Current Liabilities Non Current Liabilities Long term debt ($345,000 - $14,560) Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities & Stockholder's Equity 583,678 877,787 $ $ 15,989 3,456 3,408 100,000 14,560 137,413 330,440 467,853 140,000 269,934 409,934 877,787

Requirement 2:

Spartan Testing Corporation

Statement of retained earnings

For the year ended May 31, 2020

Particulars	$
Beginning Retained earnings June 1, 2019	250,568
Add: Net Income	29,821
Less: Dividends	10,455
Ending Retained Earnings May 31, 2020	269,934

Requirement 3:

Spartan Testing Corporation

Income Statement

For the year ended May 31, 2020

Particulars	$	$
Revenue
Testing Fee Revenue		320,926
Less: Expenses
Wages Expense	175,676
Rent Expense	24,345
Repairs & Maintenance Expense	34,565
Supplies Expense	7,453
Office Expense	34,566
Miscellaneous Expense	14,500
Total Expenses		291,105
Net Income		29,821

Requirement 4:

Current ratio = Current Assets / Current Liabilities

Current ratio = $294,109 / $137,413 = 2.14 : 1

Requirement 5:

Working capital = Current Assets - Current Liabilities

Working capital = $294,109 - $137,413 = $156,696

All the best...