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INDE433 Assignment #1 The balance sheet items of the Original Mall Shop (arranged in alphabetical order) were as follows at t
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Answer #1
(a) BALANCE SHEET AS ON SEPTEMBER 30,2015
Cash $7,400 Accounts Payable $8,500
Accounts Receivable $1,250 Notes Payable $120,090 (128590-8500)
Supplies $3,440 Total Liabilities $128,590 (132590-4000)
Furnitures and Fixers $20,000 Equities:
Land $55,000 Kay Martin Capital $4,000
Building $45,500 Total Equities $4,000
Total Assets $132,590 Total Liabilities and Equities $132,590
JOURNAL ENTRY
Date Account Title Debit Credit Balance
Oct,3 Cash $30,000 $37,400 (7400+30000)
Kay Martin Capital $30,000 $34,000 (4000+30000)
Accounts Payable $8,500 $0 (8500-8500)
Cash $8,500 $28,900 (37400-8500)
Oct,6 Furnitures and Fixers $18,000 $38,000 (20000+18000)
Accounts Payable $18,000 $18,000 (0+18000)
Supplies $1,000 $4,440 (3440+1000)
Cash $1,000 $27,900 (28900-1000)
Oct,1-6 Cash $5,500 $33,400 (27900+5500)
Revenue $5,500 $5,500
Expenses $4,000 $4,000
Cash $4,000 $29,400 (33400-4000)
INCOME STATEMENT
Revenue $5,500
Expense $4,000
Profit $1,500
(b) BALANCE SHEET AS ON OCTOBER 6,2015
Cash $29,400 Accounts Payable $18,000
Accounts Receivable $1,250 Notes Payable $120,090
Supplies $4,440 Total Liabilities $138,090
Furnitures and Fixers $38,000 Kay Martin Capital $34,000
Land $55,000 Retained Profits $1,500
Building $45,500 Total Equities $35,500
Total Assets $173,590 Total Liabilities and Equities $173,590
.(c) It is in stronger financial position on October 6
Current Ratio on September30= (7400+1250+3440)/8500= 1.422352941
Current Ratio on October630= (29400+1250+4440)/18000= 1.949444444
Current Ratio has increased from 1.42 to 1.95
Debt Ratio on Sep30=120090/132590= 0.905724414
Debt Ratio on October6=120090/173590= 0.691802523
Debt ratio decreased from 0.91 to 0.69
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