Question

Massimo Company has been operating for one year (2019). You are a member of the management team investigating expansion ideas, all of which will require borrowing funds from banks. At the start of 2020, Massimo's T-account balances were as follows: Assets: Cash 2,800 Short-Term Investments 3,800 Property and Equipment 4,3001 Liabilities: Short-Term Notes Payable Long-Term Notes Payable 4,000 2,100 Shareholders' Equity: Contributed Capital Retained Earnings 1,180 3,620 Required: 1. Using the data from these T-accounts, complete the accounting equation on January 1, 2020: Assets = Liabilities + Shareholders' Equity $ 4,800 $ 10,900 $ 6,100 +

Answer 1

Massimo Company Req 1 Assets = Liabilities + Shareholders Equity 10,900 = 6,100 + 4,800 Reg 3 Assets = Liabilities + Shareholders Equity 12,970 = 8,850 + 4,120

Calculations Assets Cash Short-term Investments Property and Equipment Total Assets Req 1 2,800 3,800 4,300 10,900 Reg 3 8,920 1,900 2,150 12,970 Liabilities Short-term Notes Payable Long-term Notes Payable Total Liabilities 4,000 2,100 6,100 4,000 4,850 8,850 Shareholders Equity Contributed Capital Retained Earnings Total Shareholders Equity 1,180 3,620 4,800 1,180 2,940 4,120

Credit Date Date Debit Date Credit Massimo Company T Accounts Date Debit Date Cash Beg Bal $ 2,800 b $ 1,900 a с $ 2,150 e d $ 3,800 Debit Date Credit Short-term Investments $ 3,800 b $ 1,900 Date Debit Date Credit Property and Equipment Beg Bal $ 4,300 с $ 2,150 Beg Bal $ 1,050 $ 680 End Bal. End Bal. $ 8,920 Short-term Notes Payable Beg Bal $ 4,000 End Bal. $ 1,900 Long-term Notes Payable Beg Bal $ 2,100 a $ 1,050 d $ 3,800 $ 2,150 Contributed Capital Beg Bal $ 1,180 Retained Earnings Beg Bal $ 680 $ 3,620 e End Bal. $ 4,000 End Bal. $ 4,850 End Bal. $ 1,180 End Bal. $ 2,940

Massimo Company Balance Sheet As of December 31, 2020 Assets Current Assets Cash Short-term Investments 4,000 Liabilities & Stockholders Equity Current Liabilities 8,920 Short-term Notes Payable 1,900 Non-Current Liabilities Long-term Notes Payable 10,820 Total Liabilties 4,850 8,850 Total Current Assets Property, Plant & Equipment Property and Equipment Stockholders Equity 2,150 Contributed Capital Retained Earnings Total Stockholders Equity 1,180 2,940 4,120 Total Assets 12,970 Total Liabilities & Stockholders Equity 12,970 Req5 Current ratio Current Assets / Current Liabilities 10820/8850 1.22 Current ratio