The following is a list of month-end account balances on October 31, 2020 Accounts Payable $4,800 Cash $7,300 Salaries Expense $2,500 Bank Loan $5,500 Services Revenue $18,500 Rent Expense $3,300 Common Stock $15,000 Telephone expense $1,800 Accounts Receivable $5,600 Utilities Expense $1,200 Furniture and Fixtures $6,300 Equipment $10,200 Office Supplies $1,300 Office Supplies Expense $4,300 ASSEST or EXPENSES = DEBITS; an increase in Assets or Expenses and a decrease in Liabilities or Owner’s Equity (for this activity, all Assets & Liabilities are Current)
The following is a list of month-end account balances on October 31, 2020
Accounts Payable $4,800
Cash $7,300
Salaries Expense $2,500
Bank Loan $5,500
Services Revenue $18,500
Rent Expense $3,300
Common Stock $15,000
Telephone expense $1,800
Utilities Expense $1,200
Furniture and Fixtures $6,300
Equipment $10,200
Office Supplies $1,300
Office Supplies Expense $4,300
ASSEST or EXPENSES = DEBITS; an increase in Assets or Expenses and a decrease in Liabilities or Owner’s Equity (for this activity, all Assets & Liabilities are Current)
LIABILITIES or OWNER’S EQUITY = CREDITS, decreases in Assets or Expenses and increases in Liabilities or Owner’s Equity
Complete the following:
1) Categorize all entries as either an Asset, Expense, Liability, or Owner’s Equity
Create a Debit/Credit
*Hint: both sides must be equal ($43,800 for this activity)
3) Create an Income Statement (Service/Revenue – Expenses = Income/Loss)
4) Create a
Calculate
Acid-Test (Cash + Accounts Receivables + Common Stock/Current Liabilities)
6) Calculate Leverage Ratios: Debt to Owner’s Equity Ratio
What do the ratios indicate about the company’s financial status?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
