Q1) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.
(1) Investors invest $500,000 in exchange for 50,000 shares of common stock.
(2) Company purchased equipment for $25,000 on account.
(3) Company paid Rent for $4,000.
(4) Company received $15,000 for services not yet performed.
(5) Employees work Monday through Friday and are paid on Friday. Salary expense is $10,000 per day and this year, December 31 falls on a Wednesday.
Q2) The following items are taken from the financial statements of Lacey Company for 2012:
Advertising Expense $14,000
Accounts Receivable 12,000
Cost of Goods Sold 65,000
Accumulated Depreciation-Equipment 20,000
Accounts Payable 21,000
Cash 44,000
Depreciation Expense 17,000
Common Stock 100,000
Dividends 25,000
Insurance Expense 5,000
Note Payable (due 2014) 70,000
Rent Expense 4,000
Prepaid Insurance 17,000
Retained Earnings (beginning) 22,000
Salaries Expense 50,000
Salaries Payable 3,500
Net sales 175,000
Supplies 4,000
Supplies Expense 3,000
Equipment 210,000
Q3) The following items are taken from the financial statements of SRW Company for 2012:
Cash $375,000
Accounts Receivable 125,000
Prepaid Insurance 100,000
Accounts Payable 88,000
Unearned Service Revenue 15,000
Equipment, net of accumulated depreciation 177,000
Common Stock 125,000
Retained Earnings 12/31/2011 106,000
Long-term debt 336,500
Service revenue 225,000
Cost of Goods Sold 62,500
Rent expense 30,000
Supplies expense 8,000
Insurance expense 18,000
Instructions
(a) Please create a classified Balance Sheet in good form for the year ended 2012.
(b) Please calculate the current ratio.