Patrie Plastics Company has been operating for three years. At December 31, 2003, the accounting records reflected the following:

During the year 2004. the company had the following summarized activities:

Required: 1. Create T-accounts for each of the accounts on the balance sheet and enter the balances at the end of 2003 as beginning balances for 2004. 2. Record each of the events for 2004 in T-accounts (including referencing) and determine the ending balances. 3. Explain your response to Event (/;). 4. Prepare a classified balance sheet at December 3 1 . 2004. 5. Compute the financial leverage ratio for 2004. What does this suggest about Patrie Plastics'

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Cash $ 35,000 Intangibles $ 5,000 Short-term investments 3,000 Accounts payable 25,000 Accounts receivable 5,000 Accrued liabilities payable 3,000 Inventory 40,000 Short-term note payable 12.000 Long-term note receivable 2,000 Long-term note payable 80,000 Equipment 80,000 Contributed capital 150,000 Factory building 150,000 Retained earnings 50,000