An alphabetical list of the adjusted trial balance accounts for North Country Rentals after its first year of operations ending March 31, 2014, is shown below:
Account Adjusted Account balance
Accounts payable $ 9,100
Accumulated depreciation, building 25,000
Accumulated depreciation, furniture 3,500
Advertising expense 16,200
Building 591,000
Cash 17,000
Depreciation expense, building 25,000
Depreciation expense, furniture 3,500
Furniture 42,800
Interest expense 10,260
Interest payable 900
Janitorial expense 41,000
Land 110,000
Long-term notes payable 362,000
Notes receivable, due 201 7 143,000
Office salaries expense 126,625
Office supplies 700
Office supplies expense 6,100
Patent 3,000
Prepaid advertising 400
Rent earned 398,400
Rent receivable 16,000
Salaries payable 2,625
Utilities expense 36,720
Wyett North, capital 415,780
Wyett North, withdrawals 28,000
Assume all accounts have a normal balance
Required
1. Calculate the capital balance as it would appear on the March 31, 2014, balance sheet.
2. Prepare a classified balance sheet. Assume that $ 215,000 of the notes receivable will be collected by March 31, 2015.
Analysis component:
North Country shows an adjusted balance in the long-Term notes payable account of $ 360,000 at March 31, 2014. Review the balance sheet just prepared and makes a reasonable assumption about what the $ 362000 was most logically used for by North Country. Explain whether or not this is generally considered a good use of borrowed funds and why.