Question

An alphabetical list of the adjusted trial balance accounts for North Country Rentals after its first year of operations ending March 31, 2020, is shown below:

Account	Adjusted Account Balance*
Accounts payable	$	9,600
Accumulated depreciation, building		25,500
Accumulated depreciation, furniture		4,000
Advertising expense		16,700
Building		596,000
Cash		17,500
Depreciation expense, building		25,500
Depreciation expense, furniture		4,000
Furniture		43,800
Interest expense		10,310
Interest payable		850
Janitorial expense		41,500
Land		115,000
Long-term notes payable		367,000
Notes receivable, due 2023		148,000
Office salaries expense		129,125
Office supplies		750
Office supplies expense		6,600
Brand name		3,500
Prepaid advertising		450
Rent revenue		403,400
Rent receivable		16,500
Salaries payable		2,875
Utilities expense		37,220
Wyett North, capital		427,730
Wyett North, withdrawals		28,500

*Assume all accounts have a normal balance.
Required:
1. Calculate the capital balance as it would appear on the March 31, 2020, balance sheet.
2. Prepare a classified balance sheet. Assume that $217,500 of the Long-Term Notes Payable will be paid during the year ended March 31, 2021. Also, $57,500 of the notes receivable will be collected by March 31, 2021.
3. Calculate the current ratio and the debt to equity ratio. (Round the final answers to 2 decimal places.)

Answer 1

Part-1 : Computation of Capital Balance
Beg Balance	$427,730.00
Net Income	$132,445.00
Drawings	$28,500.00
Ending Capital BAlance	$531,675.00

Part-2 Balance Sheet - North Country Rentals
	Amount	Amount
Asset
Current Assets
Cash	$17,500.00
Rent Receivable	$16,500.00
Prepaid Advertising	$450.00
Office Supplies	$750.00
Total Current Assets		$35,200.00
Investments
Notes Receivable, Due 2023	$148,000.00	$148,000.00
Property, Plant & Equipment
Land	$115,000.00
Building	$596,000.00
Accumulated Depreciation, Building	-$25,500.00
Furniture	$43,800.00
Accumulated Depreciation, Furniture	-$4,000.00
Total Property, Plant & Equipment		$725,300.00
Intangible Assets
Brand Name	$3,500.00	$3,500.00
Total Assets		$912,000.00
Liabilities
Current Liabilities
Accounts Payable	$9,600.00
Interest Payable	$850.00
Salaries Payable	$2,875.00
Total Current Liabilities		$13,325.00
Long Term Liabilities
Long Term Notes Payable	$367,000.00	$367,000.00
Total Liabilities		$380,325.00
Equity
Wyett Noth' Capital		$531,675.00
Total Liabilities & Equity		$912,000.00

Part-3

Current Ratio= Current Asset/ Current Liabilities

=35200/13325=2.64

Debt to Equity Ratio= Debt/ Equity

=380325/531675=0.72