Business Sim Corp. (BSC) issued 1,000 common shares to Kelly in exchange for $12,000. BSC borrowed $30,000 from the bank, promising to repay it in two years. BSC purchased computer equipment for $40,000, signing a six-month note for $5,000, and paying the balance with check number 101. BSC received $900 of supplies purchased on account. BSCs loan contains a clause (covenant) that requires BSC to maintain a ratio of current assets to current liabilities of at least 1.3.

Identify the transactions and analyze their accounting equation effects.

Assuming BSC entered into no other activities during its first year ended September 30, prepare the companys classified balance sheet. Include a balance of zero in Retained Earnings.

Calculate the current ratio of BSC.

Whether BSC is complying with or violating its loan covenant.

Assets Liabilities Stockholders' Equity 1 2. 3 4 Totals 0 0 0 BUSINESS SIM CORP. Balance Sheet At September 30 Assets Liabilities Current Assets Cash $ 5,000 Supplies 900 Total Current Assets 5,900 0 0 0 $ 5,900 $ 0 Current Ratio Numerator Denominator