P2-3 LO2-2, 2-4, 2-5

Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio (AP2-3) Jaguar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following:

Cash Investments (short-term)	$22,000 3,000
Accounts receivable	3,000
Inventory	20,000
Notes receivable (long-term)	1,000
Equipment	50,000
Factory building	90,000
Intangibles Accounts payable Accrued liabilities payable	5,000 $15,000 4,000
Notes payable (current)	7,000
Notes payable (noncurrent)	47,000
Common stock	10,000
Additional paid-in capital	80,000
Retained earnings	31,000

During the current year, the company had the following summarized activities: Purchased short-term investments for $10,000 cash. Lent $5,000 to a supplier, who signed a two-year note. Purchased equipment that cost $18,000; paid $5,000 cash and signed a oneyear note for the balance. Hired a new president at the end of the year. The contract was for $85,000 per year plus options to purchase company stock at a set price based on company performance. The new president begins her position on January 1 of next year. Issued an additional 2,000 shares of $0.50 par value common stock for $11,000 cash. Borrowed $9,000 cash from a local bank, payable in three months. Purchased a patent (an intangible asset) for $3,000 cash. Built an addition to the factory for $24,000; paid $8,000 in cash and signed a three-year note for the balance. Returned defective equipment to the manufacturer, receiving a cash refund of $1000

Required: 1. Create T-accounts for each of the accounts taken from the accounting records shown above and enter the end-of-year balances as the beginning balances for the current year. 2. Record each of the events for the current year in T-accounts (including referencing) and determine the ending balances. 3. Explain your response to event (d). 4. Prepare a trial balance at December 31 of the current year. 5. Prepare a classified balance sheet at December 31 of the current year. 6. Compute the current ratio for the current year. What does this suggest about Jaguar Plastics?