P2-3 Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio LO2-2, 2-4, 2-5

[The following information applies to the questions displayed below.] Cougar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following:

Cash	$	28,000		Accounts payable	$	20,000
Investments (short-term)		2,000		Accrued liabilities payable		3,400
Accounts receivable		3,200		Notes payable (short-term)		6,200
Inventory		29,000		Notes payable (long-term)		45,000
Notes receivable (long-term)		2,500		Common stock		10,600
Equipment		51,000		Additional paid-in capital		95,400
Factory building		104,000		Retained earnings		43,600
Intangibles		4,500

During the current year, the company had the following summarized activities:

Purchased short-term investments for $7,300 cash.

Lent $5,400 to a supplier who signed a two-year note.

Purchased equipment that cost $25,000; paid $4,300 cash and signed a one-year note for the balance.

Hired a new president at the end of the year. The contract was for $84,000 per year plus options to purchase company stock at a set price based on company performance.

Issued an additional 2,500 shares of $0.50 par value common stock for $16,000 cash.

Borrowed $11,000 cash from a local bank, payable in three months.

Purchased a patent (an intangible asset) for $1,600 cash.

Built an addition to the factory for $25,000; paid $8,700 in cash and signed a three-year note for the balance.

Returned defective equipment to the manufacturer, receiving a cash refund of $1,800.

Required:

1. & 2. Post the current year transactions to T-accounts for each of the accounts on the balance sheet. (Two items have been given in the cash T-account as examples).

Cash					Investments (short-term)
Beg. Bal.	28,000				Beg. Bal.	2,000
		7,300	(a)
		5,400	(b)
					End. Bal.	2,000
End. Bal.	15,300
Accounts Receivable					Inventory
Beg. Bal.	3,200				Beg. Bal.	29,000
End. Bal.	3,200				End. Bal.	29,000
Notes Receivable (long-term)					Equipment
Beg. Bal.	2,500				Beg. Bal.	51,000
End. Bal.	2,500				End. Bal.	51,000
Factory Building					Intangibles
Beg. Bal.	104,000				Beg. Bal.	4,500
End. Bal.	104,000				End. Bal.	4,500
Accounts Payable					Accrued Liabilities Payable
Beg. Bal.		20,000			Beg. Bal.		3,400
End. Bal.		20,000			End. Bal.		3,400
Notes Payable (short-term)					Long-Term Notes Payable
Beg. Bal.		6,200			Beg. Bal.		45,000
End. Bal.		6,200			End. Bal.		45,000
Common Stock					Additional Paid-in Capital
Beg. Bal.		10,600			Beg. Bal.		95,400
End. Bal.		10,600			End. Bal.		95,400
Retained Earnings
Beg. Bal.		43,600
End. Bal.	0	43,600