Questions 1-6

AP2-3 Recording Transactions in T-Accounts, Preparing a Statement of Financial Position, and Evaluating the Current Ratio P2-3) QLO2-5, 2-6 Modern Interiors Inc. is a leading interior design company and manufacturer and retailer of home furnishings. The following is adapted from Modern Interiors's recent annual financial statements for fiscal year ended on June 30. Dollar amounts are in thousands. Cash and cash equivalents $ 57,701 Accounts payable $ 16,961 Accounts receivable 12,293 Accrued liabilities 43,793 Inventories 149,483 Deferred revenue 62,960 Prepaid expenses and other current assets 23,621 Long-term debt 14,339 Property, plant, and equipment 270.198 Other non-current liabilities 29,273 Intangible assets 45.128 Contributed capital 43,051 Long-term investments 7,330 Retained earnings 357,845 Other non-current assets 2,468 Assume that the following transactions ($ in thousands) occurred in the first quarter ended September 30 of the fiscal year: a. Issued 1,600 additional shares for $1,020 in cash. b. Purchased $3,400 in additional intangibles for cash. c. Ordered $43,500 in wood and other raw materials for the manufacturing plants. d. Sold equipment at its cost for $4,020 cash. e. Purchased $2,980 in long-term investments for cash. f. Purchased property, plant, and equipment; paid $1,830 in cash and signed additional long-term notes for $9,400. g. Sold at cost other assets for $310 cash. h. Declared $300 in dividends, payable in October. Required: 1. Create T-accounts for each of the accounts listed above, including a new account Dividends Payable. Enter the balances at June Page 104 30 as the beginning balances for the quarter (in thousands of dollars). 2. Record each of the transactions for the first quarter ended September 30 in the T-accounts (including referencing) and determine the ending balances. 3. Explain your response to event (c). 4. Prepare a trial balance at September 30. 5. Prepare a classified statement of financial position at September 30. The company's accountant determined that $2,731 of long-term debt must be paid during the next fiscal year. 6. Compute the current ratio at September 30. Round your answer to two decimal places. What does this suggest about Modern Interiors Inc