gent Help NeededUrf
Urgent Help Needed!!!!
Initial Balance Sheet - Practice Set 1 Mack Construction Service Balance Sheet December 31, 2020 6,500 9,000 5,200 Assets Current Assets Cash Account Receivable Construction Supplies Prepaid Insurance Total Current Assets Property, Plant and Equipment Equipment (net) Trucks (Net) Total Assets 4,800 25,500 22,000 34,000 56,000 81,500 10,000 2,500 12,500 Liabilities and Owner's Equity Current Liabilities Notes Payable Account Payable Total Current Liabilities Long Term Liabilities Notes Payable Total Liabilities Owners Equity Michah Mack, Capital Total Liabilities and Equity 15,000 27,500 54,000 81,500 Objective: Complete assignments by preparing a spreadsheet in Microsoft Excel and a letter in Microsoft Word. Company Background Mack Construction Company was started two years ago, by Michah Mack on July 1, 2018. Because of exceptionally good business, Michah decided to expand operations by acquiring an additional truck and hiring two more associates. On July 1, 2020 Michah obtained, a $25,000, 10% (simple interest) bank loan to finance the expansion. The first payment of $10,000 is due July 1, 2021 and the balance is due on July 1, 2022. The terms of the loan require the borrower to have $10,000 of working capital and a minimum current ratio of 1.8:1 at December 31, 2020. If these terms are not met, the bank loan will be refinanced 15% interest. When using the Quick ratio, a minimum ratio of 1.6:1 is needed. If the Quick ratio is used instead of the current ratio how would this impact your initial results? At December 31, 2020, the accountant for Mack Construction Service prepared the attached balance sheet. Michah Mack presented the balance sheet to the bank's loan officer on January 2, 2021 confident that the company had met the terms of the loan. The loan officer was not impressed. She requested that the financial statements be audited by a CPA. A CPA was engaged and immediately realized that the balance sheet had been prepared from an unadjusted trial balance and not from an adjusted trial balance. The adjustment data at the balance sheet date consisted of the following: Adjustments: 1. 2. 3. 4. 5. 6. Earned but unbilled construction services were $1,800. Construction supplies on hand were $2,700. (Supplies are NOT Inventory) Prepaid insurance was a three-year policy dated January 1, 2020. December miscellaneous expenses incurred but unpaid at December 31, $250. Interest on the bank loan was not recorded. The amounts on the balance sheet for PP&E were net of accumulated depreciation on January 1, 2020. The amount of accumulated depreciation are as follows: a. $4,000 for Equipment b. $5,000 for Trucks Depreciation expense for 2020 is as follows: a. $4,000 for Equipment b. $8,000 for Trucks Properly state the presentation of PP&E on the Balance Sheet by showing amount of accumulated depreciation. HINT: While making adjustments for the activity above you must determine how the income statement items will impact the balance sheet or simply put - How do the income statement items get to the balance sheet? 7. 8. Requirements: Given the attached handout for Mack Construction Company, complete the following items: 1. In Microsoft Excel prepare the necessary adjusting journal entries, (Must Show Entry Details). 2. In Microsoft Excel, prepare a revised Balance Sheet after the adjusting entries are complete. 3. In Microsoft Excel, calculate the company's working capital (current assets - current liabilities) before and after the adjustments. 4. In Microsoft Excel, calculate the company's current ratio (current assets / current liabilities) before and after the adjustments. Round to one decimal place. 5. In Microsoft Excel compute the quick ratio ((current assets - inventory & prepaid items) / current liabilities) before and after the adjustments. Round to one decimal place
