Ventilo Corporation has been operating for five years. At December $31$ of last year, the accounting records has the following information:

Cash $ $33,000$

Prepaid Insurance $6,000$

Accounts Receivable $8,000$

Inventory $12,000$

Notes Receivable $2,000$

Equipment $45,000$

Building $80,000$

Patents $4,000$

Accounts Payable $20,000$

Notes Payable $($short term$)30,000$

Notes Payable $($long term$)50,000$

Common Stock $5,000$

Additional Paid$-$in Capital $45,000$

Retained Earnings $40,000$

During the current year, the company had the following occur:

a$.$ Purchased an additional insurance policy to begin coverage next year for $12$ months for $$12,000$ cash. $ $12,000$

b$.$ Lent $$3,000$ to an employee who signed a two$-$year note. $ $3,000$

c$.$ Purchased Equipment for $$30,000$; paid $$10,000$ in cash and signed a note for the remainder due in $18$ months. $ $30,000$ $ $10,000$

d$.$ Hired a new office manager with a salary of $$45,000$ per year. $ $45,000$

e$.$ Issued $1,000$ shares of common stock with a $$1$ par value for $$20,000$ cash. $1,000$ $ $20,000$

f$.$ Borrowed $$5,000$ from a bank. Principal is due in $6$ months. $ $5,000$

g$.$ Purchased another patent for $$4,500.$ $ $4,500$

h$.$ Added an extra wing in the office building for $$34,000$; paid $$18,000$ cash and signed a three$-$year note for the remaining balance. $ $34,000$ $ $18,000$

i$.$ Returned defective equipment and the manufacturer forgave $$2,000$ on the note due. $ $2,000$

Required:

$1.$ Record these transactions in the T$-$Accounts below $($be sure to include beginning balances$).$

$2.$ Create a Trial Balance at December $31$ of the Current Year.

$3.$ Create a Classified Balance Sheet.

$4.$ Compute the Current Ratio.

Cash

Debit Credit

$20,00012,000$

$5,0003,000$

$10,000$

$4,500$

$18,000$

$22,500$

Common Stock

Debit Credit

$1,000$

$1,000$

Notes Payable $($short term$)$

Debit Credit

$5,000$

$5,000$

Accounts Receivable

Debit Credit

$3,000$

$3,000$

Retained Earnings

Debit Credit

Notes Receivable

Debit Credit

Building

Debit Credit

$34,000$

$34,000$

Accounts Payable

Debit Credit

Prepaid Insurance

Debit Credit

$12,000$

$12,000$

Additional Paid$-$in Capital

Debit Credit

$19,000$

$19,000$

Notes Payable $($long term$)$

Debit Credit

$2,00020,000$

$16,000$

$34,000$

Inventory

Debit Credit

Equipment

Debit Credit

$30,0002,000$

$28,000$

Patents

Debit Credit

$4,500$

$4,500$

Ventilo Corporation

Trial Balance

At December $31,$ Current Year

Account Debit Credit

Cash

Prepaid Insurance

Accounts Receivable

Inventory

Notes Receivable

Equipment

Building

Patents

Accounts Payable

Notes Payable $($short term$)$

Notes Payable $($long term$)$

Common Stock

Additional Paid$-$in Capital

Retained Earnings

Total

Ventilo Corporation

Balance Sheet

Current Assets:

Assets:

Cash

Prepaid Insurance

Accounts Receivable

Inventory

Notes Receivable

Equipment

Building

Patents

Current Liabilities

Accounts Payable

Notes Payable $($short term$)$

Notes Payable $($long term$)$

Stockholders' Equity

Common Stock $($$$1$ par$)$

Additional Paid$-$in Capital

Retained Earnings

Total Liabilities and Stockholders' Equity

Current Ratio