Identifying Current Assets and Liabilities Dunn Sporting Goods sells athletic clothing and footwear 10 retailcustomers. Dunn's accountant indicates that the firm's operating cycleaverages 6 months. At December 31, 2019, Dunn has the following assetsand liabilities: a. Prepaid rent in the amount of 58,500. Dunn's rent is $500 permonth.b. A $9,700 account payable due in 45 days.c. Inventory in the amount of $46,230. Dunn expects to sell $38,000 ofthe inventory within 3 months. The remainder will be placed instorage until September 2020. The items placed in storage shouldbe sold by November 2020.d. An investment in marketable securities in the amount of $1,900.Dunn expects to sell $700 of the marketable securities in 6 months.The remainder are not expected to be sold until 2022. e. Cash in the amount of $1,050.f. An equipment loan in the amount of $60,000 due in March 2024.Interest of $4,500 is due in March 2020 ($3,750 of the interestrelates to 2019. with the remainder relating to the first 3 months of2020).g. An account receivable from a local university in the amount of$2,850. The university has promised to pay the full amount in 3months.h. Store equipment at a cost of $9,200. Accumulated depreciation hasbeen recorded on the store equipment in the amount of 51,250. Required: 1. Prepare the current asset and current liability portions of Dunn'sDecember 31, 20191 balance-sheet.2. Compute Dunn's working capital and current ratio at December 31,2019.3. CONCEPTUAL CONNECTION As in investor or creditor. what dothese ratios tell you about Dunn's liquidity?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Identifying Current Assets and Liabilities
Dunn Sporting Goods sells athletic clothing and footwear 10 retail
customers. Dunn's accountant indicates that the firm's operating cycle
averages 6 months. At December 31, 2019, Dunn has the following assets
and liabilities:
a. Prepaid rent in the amount of 58,500. Dunn's rent is $500 per
month.
b. A $9,700 account payable due in 45 days.
c. Inventory in the amount of $46,230. Dunn expects to sell $38,000 of
the inventory within 3 months. The remainder will be placed in
storage until September 2020. The items placed in storage should
be sold by November 2020.
d. An investment in marketable securities in the amount of $1,900.
Dunn expects to sell $700 of the marketable securities in 6 months.
The remainder are not expected to be sold until 2022.
e. Cash in the amount of $1,050.
f. An equipment loan in the amount of $60,000 due in March 2024.
Interest of $4,500 is due in March 2020 ($3,750 of the interest
relates to 2019. with the remainder relating to the first 3 months of
2020).
g. An
$2,850. The university has promised to pay the full amount in 3
months.
h. Store equipment at a cost of $9,200.
been recorded on the store equipment in the amount of 51,250.
Required:
1. Prepare the current asset and current liability portions of Dunn's
December 31, 20191 balance-sheet.
2. Compute Dunn's
2019.
3. CONCEPTUAL CONNECTION As in investor or creditor. what do
these ratios tell you about Dunn's liquidity?
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