4 11.11 points eBook Print References East Hill Home Healthcare Services was organized five years ago...

Transcribed Image Text:

4 11.11 points eBook Print References East Hill Home Healthcare Services was organized five years ago by four friends who each invested $10,000 in the company and, in turn, were issued in total 8,000 shares of $1.00 par value common stock. To date, they are the only stockholders. At the end of last year, the accounting records reflected total assets of $700,000 ($50,000 cash; $500,000 land; $50,000 equipment; and $100,000 buildings), total liabilities of $200,000 (short-term notes payable $100,000 and long-term notes payable $100,000), and stockholders' equity of $500,000 ($20,000 common stock; $80,000 additional paid-in capital; and $400,000 retained earnings). During the current year, the following summarized events occurred: a. Sold 9,000 additional shares of stock to the original organizers for a total of $90,000 cash. b. Purchased a building for $60,000, equipment for $15,000, and four acres of land for $14,000; paid $9,000 in cash and signed a note for the balance (due in 15 years). (Hint: Five different accounts are affected.) c. Sold one acre of land acquired in (b) for $3,500 cash to another company. d. Purchased short-term investments for $18,000 cash. e. One stockholder reported to the company that 300 shares of his East Hill stock had been sold and transferred to another stockholder for $3,000 cash. Lent one of the shareholders $5,000 for moving costs and received a signed, six-month note from the shareholder Required: 1. Was East Hill Home Healthcare Services organized as a sole proprietorship, a partnership, or a corporation? 2. During the current year, the records of the company were inadequate. You were asked to prepare the summary of the preceding transactions. To develop a quick assessment of their economic effects on East Hill Home Healthcare Services, you have decided to complete the tabulation that follows and to use plus (+) for increases and minus (-) for decreases for each account. The first event is used as an example. 4. Based only on the completed tabulation, provide the following amounts: 5. Compute the current ratio for the current year. 4 11.11 points eBook Print References East Hill Home Healthcare Services was organized five years ago by four friends who each invested $10,000 in the company and, in turn, were issued in total 8,000 shares of $1.00 par value common stock. To date, they are the only stockholders. At the end of last year, the accounting records reflected total assets of $700,000 ($50,000 cash; $500,000 land; $50,000 equipment; and $100,000 buildings), total liabilities of $200,000 (short-term notes payable $100,000 and long-term notes payable $100,000), and stockholders' equity of $500,000 ($20,000 common stock; $80,000 additional paid-in capital; and $400,000 retained earnings). During the current year, the following summarized events occurred: a. Sold 9,000 additional shares of stock to the original organizers for a total of $90,000 cash. b. Purchased a building for $60,000, equipment for $15,000, and four acres of land for $14,000; paid $9,000 in cash and signed a note for the balance (due in 15 years). (Hint: Five different accounts are affected.) c. Sold one acre of land acquired in (b) for $3,500 cash to another company. d. Purchased short-term investments for $18,000 cash. e. One stockholder reported to the company that 300 shares of his East Hill stock had been sold and transferred to another stockholder for $3,000 cash. Lent one of the shareholders $5,000 for moving costs and received a signed, six-month note from the shareholder Required: 1. Was East Hill Home Healthcare Services organized as a sole proprietorship, a partnership, or a corporation? 2. During the current year, the records of the company were inadequate. You were asked to prepare the summary of the preceding transactions. To develop a quick assessment of their economic effects on East Hill Home Healthcare Services, you have decided to complete the tabulation that follows and to use plus (+) for increases and minus (-) for decreases for each account. The first event is used as an example. 4. Based only on the completed tabulation, provide the following amounts: 5. Compute the current ratio for the current year.