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The adjusted trial balance for Martell Bowling Alley at December 31, 2017, contains the following accounts:
Debit Credit
Buildings $128,800 Common stock $90,000
Accounts receivable 14,520 Retained earnings 25,000
Prepaid insurance 4,680 Accumulated depreciation - buildings 42,600
Cash 18,040 Accounts payable 12,300
Equipment 62,400 Notes payable 97,780
Land 67,000 Accumulated depreciation - equipment 18,720
Insurance expense 780 Interest payable 2,600
Depreciation expense 7,360 Service revenue 17,180
Interest expense 2,600
$306,180 $306,180
1. Prepare a classified balance sheet; assume that $22,000 of the note payable will be paid in 2018.
2. By how much does current assets exceed current liabilities?
3. What percentage of current assets are in the form of cash?
4. Determine the company's liquidity.

Respuesta :

anthougo

Answer:

Martell Bowling Alley

Martell Bowling Alley

Balance Sheet

As of December 31, 2017

Assets

Current assets:

Cash                                      $18,040

Accounts receivable              14,520  

Prepaid insurance                   4,680                   $37,240

Equipment                            62,400

Accumulated depreciation    18,720   $43,680

Buildings                             128,800

Accumulated depreciation 42,600      86,200

Land                                                       67,000  196,880

Total Assets                                                      $234,120

Liabilities and Equity

Current liabilities:    

Accounts payable                                12,300

Interest payable                                    2,600

Notes payable (short-term)               22,000 $36,900

Notes payable (long-term)                                75,780

Total liabilities                                                 $112,680

Common stock                                 90,000

Retained earnings                             31,440  $121,440

Total liabilities and equity                             $234,120

2. The current assets exceed the current liabilities by $340.

3. The percentage of current assets in cash is 48.44%.

4. The company's liquidity = 48.89%

Explanation:

a) Data and Calculations:

Adjusted Trial Balance

As of December 31, 2017

                                                Debit         Credit

Cash                                        18,040

Accounts receivable              14,520  

Prepaid insurance                   4,680

Equipment                            62,400

Accumulated depreciation - equipment $18,720

Buildings                             128,800

Accumulated depreciation - buildings    42,600

Land                                     67,000

Accounts payable                                     12,300

Interest payable                                         2,600

Notes payable                                          97,780

Common stock                                        90,000

Retained earnings                                   25,000

Service revenue                                        17,180

Insurance expense                  780

Depreciation expense          7,360

Interest expense                  2,600

                                        $306,180    $306,180

Notes payable $ 97,780

Short-term notes payable $22,000

Long-term notes payable $75,780 (97,780 - 22,000)

Service revenue                                    $17,180

Insurance expense                  780

Depreciation expense          7,360

Interest expense                  2,600       10,740

Net income                                           $6,440

Retained earnings, beginning  $25,000

Net income                                     6,440

Retained earnings, ending        $31,440

2. Current assets = $37,240

Current liabilities =  36,900

Working capital =        $340

Cash = $18,040

Current assets = $37,240

Percentage of cash in current assets = $18,040/$37,240 * 100 = 48.44%

Liquidity = Cash/Current liabilities = $18,040/$36,900 * 100 = 48.89%

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