Answer:
Martell Bowling Alley
Martell Bowling Alley
Balance Sheet
As of December 31, 2017
Assets
Current assets:
Cash $18,040
Accounts receivable 14,520
Prepaid insurance 4,680 $37,240
Equipment 62,400
Accumulated depreciation 18,720 $43,680
Buildings 128,800
Accumulated depreciation 42,600 86,200
Land 67,000 196,880
Total Assets $234,120
Liabilities and Equity
Current liabilities:
Accounts payable 12,300
Interest payable 2,600
Notes payable (short-term) 22,000 $36,900
Notes payable (long-term) 75,780
Total liabilities $112,680
Common stock 90,000
Retained earnings 31,440 $121,440
Total liabilities and equity $234,120
2. The current assets exceed the current liabilities by $340.
3. The percentage of current assets in cash is 48.44%.
4. The company's liquidity = 48.89%
Step-by-step explanation:
a) Data and Calculations:
Adjusted Trial Balance
As of December 31, 2017
Debit Credit
Cash 18,040
Accounts receivable 14,520
Prepaid insurance 4,680
Equipment 62,400
Accumulated depreciation - equipment $18,720
Buildings 128,800
Accumulated depreciation - buildings 42,600
Land 67,000
Accounts payable 12,300
Interest payable 2,600
Notes payable 97,780
Common stock 90,000
Retained earnings 25,000
Service revenue 17,180
Insurance expense 780
Depreciation expense 7,360
Interest expense 2,600
$306,180 $306,180
Notes payable $ 97,780
Short-term notes payable $22,000
Long-term notes payable $75,780 (97,780 - 22,000)
Service revenue $17,180
Insurance expense 780
Depreciation expense 7,360
Interest expense 2,600 10,740
Net income $6,440
Retained earnings, beginning $25,000
Net income 6,440
Retained earnings, ending $31,440
2. Current assets = $37,240
Current liabilities = 36,900
Working capital = $340
Cash = $18,040
Current assets = $37,240
Percentage of cash in current assets = $18,040/$37,240 * 100 = 48.44%
Liquidity = Cash/Current liabilities = $18,040/$36,900 * 100 = 48.89%