Higgins Company began operations last year. You are a member of the management team investigating expansion ideas that will require borrowing funds from banks. On January 1, the start of the current year, Higgins T-account balances were as follows:

Required:

1. Using the data from these T-accounts, determine the amounts for the following on January 1 of the current year:

2. Prepare journal entries for transactions (a) through (e) for the current year.

1. Borrowed $7,500 from a local bank, signing a note due in three years.
2. Sold $5,000 of the investments for $5,000 cash.
3. Sold one-half of the property and equipment for $2,200 in cash.
4. Declared $2,200 in cash dividends to stockholders.
5. Paid dividends to stockholders.

3. Enter the effects of the transactions in 2. above in the T-accounts.

4. Prepare a trial balance at December 31.

5. Prepare a classified balance sheet at December 31 of the current year in good form.

6. Other stockholders' equity items Calculate the current ratio at December 31 of the current year. If the industry average for the current ratio is 1.36.

Assets: Cash 7,100 Short-Term Investments 6,000 Property and Equipment 4,400 Liabilities: Notes Payable (current) Notes Payable (noncurrect) 3,600 2,200 Common Stock Additional Paid-in Capital Retained Earnings 1,200 5,400 5, 100 Using the data from these T-accounts, determine the amounts for the following on January 1 of the current year: Assets = Liabilities + Stockholders' Equity