Balance Sheet : The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities. Income Statement: Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period. Requirement-1: To Prepare: The classified balance sheet for College Spirit at Dec. 31, 2019.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 42E

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-1:

To Prepare:

The classified balance sheet for College Spirit at Dec. 31, 2019.

Expert Solution

Answer to Problem 42E

The classified balance sheet for College Spirit at Dec. 31, 2019 is as follows:

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Explanation of Solution

Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

The classified balance sheet for College Spirit at Dec. 31, 2019 is prepared as follows;

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-2:

To Calculate:

The working capital and current ratio for the company.

Expert Solution

Answer to Problem 42E

The working capital and current ratio for the company is as follows:

Working Capital		$ 389,300
Current Ratio		3.34

Explanation of Solution

The working capital and current ratio for the company is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-3:

To Discuss:

The liquidity of the company.

Expert Solution

Answer to Problem 42E

The firm is more liquid because its current ratio is higher than 2.

Explanation of Solution

The working capital and current ration as on Dec. 31, 2019 is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

The firm is more liquid because its current ratio is higher than 2.

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 42E

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-1:

To Prepare:

The classified balance sheet for College Spirit at Dec. 31, 2019.

Expert Solution

Answer to Problem 42E

The classified balance sheet for College Spirit at Dec. 31, 2019 is as follows:

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Explanation of Solution

Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

The classified balance sheet for College Spirit at Dec. 31, 2019 is prepared as follows;

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-2:

To Calculate:

The working capital and current ratio for the company.

Expert Solution

Answer to Problem 42E

The working capital and current ratio for the company is as follows:

Working Capital		$ 389,300
Current Ratio		3.34

Explanation of Solution

The working capital and current ratio for the company is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-3:

To Discuss:

The liquidity of the company.

Expert Solution

Answer to Problem 42E

The firm is more liquid because its current ratio is higher than 2.

Explanation of Solution

The working capital and current ration as on Dec. 31, 2019 is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

The firm is more liquid because its current ratio is higher than 2.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 42E

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-1:

To Prepare:

The classified balance sheet for College Spirit at Dec. 31, 2019.

Expert Solution

Answer to Problem 42E

The classified balance sheet for College Spirit at Dec. 31, 2019 is as follows:

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Explanation of Solution

Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

The classified balance sheet for College Spirit at Dec. 31, 2019 is prepared as follows;

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-2:

To Calculate:

The working capital and current ratio for the company.

Expert Solution

Answer to Problem 42E

The working capital and current ratio for the company is as follows:

Working Capital		$ 389,300
Current Ratio		3.34

Explanation of Solution

The working capital and current ratio for the company is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-3:

To Discuss:

The liquidity of the company.

Expert Solution

Answer to Problem 42E

The firm is more liquid because its current ratio is higher than 2.

Explanation of Solution

The working capital and current ration as on Dec. 31, 2019 is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

The firm is more liquid because its current ratio is higher than 2.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 42E

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-1:

To Prepare:

The classified balance sheet for College Spirit at Dec. 31, 2019.

Expert Solution

Answer to Problem 42E

The classified balance sheet for College Spirit at Dec. 31, 2019 is as follows:

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Explanation of Solution

Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

The classified balance sheet for College Spirit at Dec. 31, 2019 is prepared as follows;

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-2:

To Calculate:

The working capital and current ratio for the company.

Expert Solution

Answer to Problem 42E

The working capital and current ratio for the company is as follows:

Working Capital		$ 389,300
Current Ratio		3.34

Explanation of Solution

The working capital and current ratio for the company is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-3:

To Discuss:

The liquidity of the company.

Expert Solution

Answer to Problem 42E

The firm is more liquid because its current ratio is higher than 2.

Explanation of Solution

The working capital and current ration as on Dec. 31, 2019 is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

The firm is more liquid because its current ratio is higher than 2.

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Answer 5

Chapter 1, Problem 42E

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-1:

To Prepare:

The classified balance sheet for College Spirit at Dec. 31, 2019.

Expert Solution

Answer to Problem 42E

The classified balance sheet for College Spirit at Dec. 31, 2019 is as follows:

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Explanation of Solution

Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

The classified balance sheet for College Spirit at Dec. 31, 2019 is prepared as follows;

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-2:

To Calculate:

The working capital and current ratio for the company.

Expert Solution

Answer to Problem 42E

The working capital and current ratio for the company is as follows:

Working Capital		$ 389,300
Current Ratio		3.34

Explanation of Solution

The working capital and current ratio for the company is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-3:

To Discuss:

The liquidity of the company.

Expert Solution

Answer to Problem 42E

The firm is more liquid because its current ratio is higher than 2.

Explanation of Solution

The working capital and current ration as on Dec. 31, 2019 is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

The firm is more liquid because its current ratio is higher than 2.

Answer 6

Chapter 1, Problem 42E

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-1:

To Prepare:

The classified balance sheet for College Spirit at Dec. 31, 2019.

Expert Solution

Answer to Problem 42E

The classified balance sheet for College Spirit at Dec. 31, 2019 is as follows:

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Explanation of Solution

Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

The classified balance sheet for College Spirit at Dec. 31, 2019 is prepared as follows;

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Answer 7

Chapter 1, Problem 42E

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-1:

To Prepare:

The classified balance sheet for College Spirit at Dec. 31, 2019.

Answer 8

Expert Solution

Answer to Problem 42E

The classified balance sheet for College Spirit at Dec. 31, 2019 is as follows:

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

The classified balance sheet for College Spirit at Dec. 31, 2019 is prepared as follows;

College Spirit
Balance Sheet
As on Dec. 31, 2019
ASSETS
Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400	$ 555,400

Long Term Investment		$ 110,900

Property, Plant and Equipment:
Furniture	$ 88,000
Less: Accumulated depreciation	$ (23,700)	$ 64,300

Total Assets		$ 730,600

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
		$ 166,100

Long Term Liabilities:
Bonds Payable		$ 180,000

Equity:
Common Stock	$ 300,000
Retained earnings	$ 84,500	$ 384,500
Total Liabilities and Equity		$ 730,600

Answer 13

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-2:

To Calculate:

The working capital and current ratio for the company.

Expert Solution

Answer to Problem 42E

The working capital and current ratio for the company is as follows:

Working Capital		$ 389,300
Current Ratio		3.34

Explanation of Solution

The working capital and current ratio for the company is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

Answer 14

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-2:

To Calculate:

The working capital and current ratio for the company.

Answer 15

Expert Solution

Answer to Problem 42E

The working capital and current ratio for the company is as follows:

Working Capital		$ 389,300
Current Ratio		3.34

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

The working capital and current ratio for the company is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

Answer 20

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-3:

To Discuss:

The liquidity of the company.

Expert Solution

Answer to Problem 42E

The firm is more liquid because its current ratio is higher than 2.

Explanation of Solution

The working capital and current ration as on Dec. 31, 2019 is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

The firm is more liquid because its current ratio is higher than 2.

Answer 21

To determine

Concept Introduction:

Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

Requirement-3:

To Discuss:

The liquidity of the company.

Answer 22

Expert Solution

Answer to Problem 42E

The firm is more liquid because its current ratio is higher than 2.

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

The working capital and current ration as on Dec. 31, 2019 is calculated as follows:

Current Assets:
Cash	$ 13,300
Accounts Receivables	$ 6,700
Prepaid Rent	$ 54,000
Inventory	$ 481,400
Total Current Assets (A)		$ 555,400

Current Liabilities:
Income Taxes Payable	$ 11,400
Accounts Payable	$ 104,700
Notes Payable	$ 50,000
Total Current Liabilities (B)		$ 166,100

Working Capital (A-B)		$ 389,300
Current Ratio (A/B)		3.34

The firm is more liquid because its current ratio is higher than 2.

Answer 27

Ch. 1 - Define accounting. How does accounting differ from...Ch. 1 - Prob. 2DQ Ch. 1 - What is accounting entity?Ch. 1 - Prob. 4DQ Ch. 1 - Prob. 5DQ Ch. 1 - Prob. 6DQ Ch. 1 - Define the terms revenue and expense. How are...Ch. 1 - Name and briefly describe the purpose of the four...Ch. 1 - What types of questions are answered by the...Ch. 1 - Prob. 10DQ

Concept explainers

Answer to Problem 42E

Explanation of Solution

Answer to Problem 42E

Explanation of Solution

Answer to Problem 42E

Explanation of Solution

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