Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem 3.72BP
LO 5
(Learning Objective 5: Close the books, evaluate retained earnings) The accounts of Meadowbrook Service, Inc., at January 31, 2018, are listed in alphabetical order.
| Accounts payable................ | $ 10,000 | Interest expense.............. | $ 200 |
| Accounts receivable.............. | 1,000 | Note payable, long-term... | 15,600 |
| Other assets, long-term... | 13,700 | ||
| 7,100 | Prepaid expenses............. | 5,000 | |
| Advertising expense.............. | 11,200 | Retained earnings, January 31, 2017............................... | |
| Cash....................................... | 22,000 | 13,700 | |
| Common stock...................... | 1,500 | Salary expense.................... | 27,800 |
| Current portion of long term rote parable.................... | Salary payable.................. | 2,000 | |
| 2,200 | Service revenue................. | 95,500 | |
| Depreciation expense—equipment | 2,100 | Supplies............................. | 6,400 |
| Dividends declared.............. | 13,000 | Supplies expense................. | 5,000 |
| Equipment......................... | 43,000 | Unearned service revenue... | 3,000 |
Requirements
- 1. All adjustments nave been journalized and posted but the closing entries have no: yet been made. Journalize Meadowbrook’s closing entries at January 31, 2018
- 2. Set up a T-account for Retained Earnings and post to that account. Then calculate Meadowbrook’s net income for the year ended January 31, 2018. What is the ending balance of Retained Earnings?
- 3. Did Retained Earnings increase or decrease during the year? What caused the increase or decrease?
LO 4, 6
P3-72B. (Learning Objectives 4, 6: Construct the financial statements; analyze and evaluate liquidity and debt-paying ability) Refer back to Problem 3·71B.
Requirements
- 1. Use the Meadowbrook Services data in Problem 3-71B to prepare the company s classified
balance sheet at January 31, 2018. Label total assets, total liabilities, and stockholder’s equity. - 2. Calculate Meadowbrook’s networking capital,
current ratio , and debt ratio at January 31, 2018, rounding to two decimal places. At January 31, 2017, the networking capital was $16,700, the current ratio was 1.75, and the debt ratio was 0.25. Did Meadowbrook’s ability to pay both current and total liabilities improve or deteriorate during the fiscal year? Evaluate Meadowbrook’s debt position as strong or weak and give your reason.
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Chapter 3 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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