Chapter 2 Take Home Quiz

The following information is provided for Hennepin Productions, Inc. at December 31, 2015:

Hennepin Productions ? Monthly Account Balances

(in thousands of dollars)

Balance

Cash

$ 20,000

Short-Term Investments

3,150

Accounts Receivable

5,500

Other Assets

1,800

Plant and Equipment

1,200

Land

5,000

Long-Term Investments

500

Other Noncurrent Assets

800

Accounts Payable

5,750

Accrued Expenses Payable

1,600

Interest Payable

Short-Term Notes Payable

3,100

5,000

Long-Term Notes Payable

6,000

Dividends Payable

1,500

Common Stock

4,600

Retained Earnings

10,400

Hennepin Productions entered into the following transactions (in thousands of dollars) during January 2016:

1. Issued 400 shares of common stock for $9 each.

2. Paid $5,200 on a short-term note payable including $1,500 of accrued interest from last period.

3. Purchased supplies worth $2,250 on account.

4. Geoffrey Hennepin, CEO signed a $15,000 note payable for construction of his beach house. The note is due on January 31, 2017.

5. Paid a cash dividend of $1,500.

6. Purchased 100 shares of stock in Barbara Productions for $25 each. Hennepin intends to hold the investment for 5 years.

7. Purchased equipment totaling $20,000 by signing a $12,500 note due January 31, 2018. The remaining balance was paid in cash.

8. Sold $500 of long term investments in exchange for $500.

9. Collected $750 on outstanding accounts receivable.

10. Paid accounts payable of $5,750.

Required:

a. Prepare the journal entry for each transaction.

b. Create T-accounts with beginning balances. Post each journal entry to the appropriate T-account. Create new accounts as necessary.

c. Prepare comparative balance sheets at December 31, 2015 and January 31, 2016 in good form.

d. Calculate the current ratio at December 31, 2015 and January 31, 2016. Assuming that Hennepin has a target ratio of 1.0, has the ratio improved or deteriorated? Explain why?

ACCT: 2100 Spring 2016 Chapter 2 Take Home Quiz The following information is provided for Hennepin Productions, Inc. at December 31, 2015: Hennepin Productions - Monthly Account Balances (in thousands of dollars) Cash Short-Term Investments Accounts Receivable Other Assets Plant and Equipment Land Long-Term Investments Other Noncurrent Assets Accounts Payable Accrued Expenses Payable Interest Payable Short-Term Notes Payable Long-Term Notes Payable Dividends Payable Common Stock Retained Earnings Balance $ 20,000 3,150 5,500 1,800 1,200 5,000 500 800 5,750 1,600 3,100 5,000 6,000 1,500 4,600 10,400 Hennepin Productions entered into the following transactions (in thousands of dollars) during January 2016: 1. Issued 400 shares of common stock for $9 each. 2. Paid $5,200 on a short-term note payable including $1,500 of accrued interest from last period. 3. Purchased supplies worth $2,250 on account. 4. Geoffrey Hennepin, CEO signed a $15,000 note payable for construction of his beach house. The note is due on January 31, 2017. 5. Paid a cash dividend of $1,500. 6. Purchased 100 shares of stock in Barbara Productions for $25 each. Hennepin intends to hold the investment for 5 years. 7. Purchased equipment totaling $20,000 by signing a $12,500 note due January 31, 2018. The remaining balance was paid in cash. 8. Sold $500 of long term investments in exchange for $500. 9. Collected $750 on outstanding accounts receivable. 10. Paid accounts payable of $5,750. Required: a. Prepare the journal entry for each transaction. b. Create T-accounts with beginning balances. Post each journal entry to the appropriate Taccount. Create new accounts as necessary. c. Prepare comparative balance sheets at December 31, 2015 and January 31, 2016 in good form. d. Calculate the current ratio at December 31, 2015 and January 31, 2016. Assuming that Hennepin has a target ratio of 1.0, has the ratio improved or deteriorated? Explain why