
Concept explainers
Analyzing the Effects of Transactions Using T-Accounts and Interpreting the
Higgins Company began operations last year. You are a member of the management team investigating expansion ideas that will require borrowing funds from banks. At the start of the current year. Higgins’s T-account balances were as follows:
Assets:
Cash | |
5,000 |
Liabilities:
Short-Term Investments |
2,500 |
Property and Equipment |
3,000 |
Short-Term Notes Payable 2,200 |
Stockholders ' Equity:
Long-Term Notes Payable 1,800 |
Common Stock | |
1 | 500 |
Additional Paid-in Capital |
4,000 |
3,000 |
Required:
1. Using the data from these T-accounts, determine the amounts for the following on January 1 of the current year
Assets $ ____ = Liabilities $__+ Stockholders’ Equity $__
2. Enter the following transactions for the current year in the T-accounts:
- (a) Borrowed $4,000 from a local bank, signing a note due in three years.
- (b) Sold $1,500 of the investments for $1,500 cash.
- (c) Sold one-half of the property and equipment for $1,500 in cash.
- (d) Declared and paid $,800 in cash dividends to stockholders.
3. Compute ending balances in the T-accounts to determine amounts for the following on December 31 of the current year
Assets $ _____ = Liabilities $ _____ + Stockholders’ Equity $ _____
4. Calculate the current ratio at December 31 of the current year. If the industry average for the current ratio is 1.50. What does your computation suggest to you about Higgins Company? Would you suggest that Higgins Company increase its short-term liabilities? Why or why not?

Want to see the full answer?
Check out a sample textbook solution
Chapter 2 Solutions
FINANCIAL ACCOUNTING 9TH
- At the beginning of the year, Quinn Manufacturing had liabilities of $120,000. During the year, assets increased by $95,000, and at year-end, assets totaled $290,000. Liabilities decreased by $25,000 during the year. What are the beginning and ending amounts of equity for Quinn Manufacturing?arrow_forwardI need guidance with this general accounting problem using the right accounting principles.arrow_forwardgeneral accountingarrow_forward
- Harriet Manufacturing's budget for the coming year includes $780,000 for manufacturing overhead, 85,000 hours of direct labor, and 520,000 hours of machine time. If Harriet applies overhead using a predetermined rate based on machine hours, what amount of overhead will be assigned to a unit of output which requires 0.78 machine hours and 0.32 labor hours to complete?arrow_forwardPlease provide the accurate answer to this general accounting problem using valid techniques.arrow_forwardHello tutor please given General accounting question answer do fast and properly explain all answerarrow_forward
- NextGen Cloud Services reported sales revenue of $89,200 on its income statement. The accounts receivable balance decreased by $4,700 over the year. Determine the amount of cash received from customers.arrow_forwardProvide Accurate Answerarrow_forwardDetermine company's other comprehensive incomearrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College


