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: Assets: Debit Liabilities: Cash 7,100 Debit Notes Payable (current) Debit Credit Stockholders' Equity: Credit Common Stock Credit 3,600 1,200 Short-Term Investments Debit 6,000 Credit Notes Payable (noncurrent) Debit Credit 2,200 Additional Paid-in Capital Debit Credit 5,400 Property and Equipment Debit Credit 4,400 Retained Earnings Debit Required: 1. Using the data from the T-accounts given, complete the accounting equation on January 1 of the current year. 2. Prepare journal entries for transactions (a) through (e) for the current year. a. Borrowed $7,500 from a local bank, signing a note due in three years. b. Sold $5,000 of the investments for $5,000 cash. c. Sold one-half of the property and equipment for $2,200 in cash. Credit 5,100

Higgins Company began operations last year. You are a member of the management team investigating expansion ideas that will reauite borrowina funds from banks. On Januarv 1 . the start of the current vear. Hiagins' T-account balances were as follows: a. corrowed $, suv irom a local Dank, signing a note due in three years: b. Sold $5,000 of the investments for $5,000 cash. c. Sold one-half of the property and equipment for $2,200 in cash. 1. Using the data from the T-accounts given, complete the accounting equation on January 1 of the current year. 2. Prepare journal entries for transactions (a) through (e) for the current year. a. Borrowed $7,500 from a local bank, signing a note due in three years. b. Sold $5,000 of the investments for $5,000 cash. c. Sold one-half of the property and equipment for $2,200 in cash. d. Declared $2,200 in cash dividends to stockholders. e. Paid dividends to stockholders. 3. Enter the effects of the transactions in Requirement 2 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. 6. Calculate the current ratio at December 31 of the current year