Byrd Company had the following transactions during 2016 and 2017:

1.	On December 24, 2016, a computer was purchased on account from Computers International for $60,000. Terms of the sale were 2/10, n/30.
2.	Byrd calculated that to forgo the discount for the computer would be the equivalent of paying 36% interest annually for the extra 20 days. Therefore, Byrd went to First Local Bank and signed a $60,000, 30-day note at 12% in order to take advantage of the discount terms. This transaction took place on December 29, 2016. (The account payable was paid on January 2, 2017, and the note was paid at maturity. Assume a 360-day year.)
3.	On December 30, 2016, Byrd declared a $2.00 cash dividend to the common shareholders. Ten thousand shares were outstanding on this date. The dividend is to be paid on January 5, 2017. (Byrd Company charges dividends directly to retained earnings.)

	Required:
1.	Prepare the journal entries for Byrd for both 2016 and 2017. Assume that the net price method is used to account for the credit terms.
2.	Show how the preceding items would be reported in the current liabilities section of Byrds December 31, 2016, balance sheet.
3.	Next Level Assuming Byrds current assets were $1,200,000 and its current ratio was 2.4 at the end of 2015, compute the current ratio at the end of 2016 (based solely on the effects of the preceding transactions).

CHART OF ACCOUNTS

Byrd Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
162	Computer
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
221	Notes Payable
224	Interest Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable
271	Dividends Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
431	Interest Income

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

Prepare the journal entries for Byrd for both 2016 and 2017. Assume that the net price method is used to account for the credit terms. Additional Instructions

PAGE 11

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Show how the items would be reported in the current liabilities section of Byrds December 31, 2016, balance sheet. Additional Instructions

Byrd Company

Partial Balance Sheet

December 31, 2016

1	Current Liabilities:
2
3
4
5

Prepare the journal entries for Byrd for both 2016 and 2017. Assume that the net price method is used to account for the credit terms. Additional Instructions

PAGE 11

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

X

Next Level

Assuming Byrds current assets were $1,200,000 and its current ratio was 2.4 at the end of 2015, compute the current ratio at the end of 2016 (based solely on the effects of the preceding transactions). Round your answer to two decimal places.

Byrds current ratio at the end of 2016 is

.