Injection Plastics Company has been operating for three years At December 31, 2011, the accounting records reflected the following During the year 2012, the following summarized transactions were completed a Purchased equipment that cost ( $ 18,000 ) paid ( $ 6,000 ) cash and signed a one year note...

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Injection Plastics Company has been operating for three years. At December.31, 2011, the accounting records reflected the

Question:

Injection Plastics Company has been operating for three years. At December.31, 2011, the accounting records reflected the following:

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During the year 2012, the following summarized transactions were completed:

a. Purchased equipment that cost $\$ 18,000$; paid $\$ 6,000$ cash and signed a one-year note for the balance.

b. Issued 2,000 additional shares for $\$ 12,000$ cash.

c. Lent $\$ 7,000$ to a supplier who signed a two-year note.

d. Purchased short-term investments for $\$ 9,000$ in cash.

e. Paid $\$ 5,000$ on the note in transaction (a).

f. Borrowed $\$ 12,000$ cash on December 31, 2012, from a local bank and signed a note, payable June $30,2013$.
g. Purchased a patent (an intangible asset) for $\$ 3,000$ cash.
h. Built an addition to the factory for $\$ 25,000$; paid $\$ 9,000$ in cash and signed a three-year note for the balance.
i. Hired a new president at the end of the year. The contract was for $\$ 85,000$ per year plus options to purchase company shares at a set price based on company performance.
j. Returned defective equipment to the manufacturer, receiving a cash refund of $\$ 1,000$.
Required:
1) Create T-accounts for each of the accounts on the statement of financial position and enter the balances at the end of 2011 as beginning balances for 2012.
2) Record each of the transactions for 2012 in $\mathrm{T}$-accounts (including referencing) and determine the ending balances.
3) Explain your response to transaction (i).
4) Prepare a classified statement of finaricial position at December 31, 2012.
5) Compute the debt-to-equity ratio at December 31, 2012. What does this ratio suggest about Injection Plastics Company?