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 $741,000 ($64,000 cash; $516,000 land; $51,000 equipment; and $110,000 buildings), total liabilities of $228,000 (short-term notes payable $118,000 and long-term notes payable $110,000), and stockholders' equity of $513,000 ($21,000 common stock; $83,000 additional paid-in capital; and $409,000 retained earnings). During the current year, the following summarized events occurred: a. Sold 11,000 additional shares of stock to the original organizers for a total of $91,000 cash. b. Purchased a building for $59,000, equipment for $13,000, and four acres of land for $18,000; paid $16,000 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 $4,500 cash to another company. d. Purchased short-term investments for $13,500 cash. e. One stockholder reported to the company that 370 shares of his East Hill stock had been sold and transferred to another stockholder for $3,100 cash. f. Lent one of the shareholders $5,100 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 transactions shown above. 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. Required 1 Required 2 Required 4 Required 5 During the current year, the records of the company were inadequate. You were asked to prepare the summary of transactions shown above. To develop a quick assessm 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 event is used as an example. Assets + Cash Short-Term Notes Investments Receivable Land Buildings Equipment Liabilities Short-Term Long-Term Notes Notes Payable Payable 118,000 110,000 516,000 110,000 51,000 64,000 91,000 Beg. (a) (b) (c) (d) (e) (f) Stockholders' Equity Additional Common Retained Paid-in Stock Capital Earnings 21,000 83,000 409,000 Beg. 11,000 80,000 (a) (b) (c) (d) (e) (f) 32,000 163,000 409,000 155,000 0 0 516,000 110,000 51,000 = 118,000 110,000 + Required 1 Required 2 Required 4 Required 5 Based only on the completed tabulation, provide the following amounts: a. b. Total assets at the end of the year. Total liabilities at the end of the year. Total stockholders' equity at the end of the year. Cash balance at the end of the year. C. d. e. Total current assets at the end of the year. Required 1 Required 2 Required 4 Required 5 Compute the current ratio for the current year. (Round your answer to 2 decimal places.) Current ratio
