Cougar Plastics Company has been operating for three years. At December 31 of la
ID: 2606681 • Letter: C
Question
Cougar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following Cash Investments (short-term) Accounts receivable Inventory Notes receivable (long-term) Equipment Factory building Intangibles $20,000 Accounts payable $18,000 2,700 6,300 48,000 10,300 92,700 32,800 2,600 3,300 Accrued liabilities payable Notes payable (short-term) Notes payable (long-term) 29,000 2,600 Common stock 59,000 Additional paid-in capital 90,000 Retained earnings 4,300 During the current year, the company had the following summarized activities: a. Purchased short-term investments for $8,600 cash. b. Lent $6,700 to a supplier who signed a two-year note c. Purchased equipment that cost $25,000; paid $5,200 cash and signed a one-year note for the balance d. Hired a new president at the end of the year. The contract was for $78,000 per year plus options to purchase company stock at a set price based on company performance e. Issued an additional 2,000 shares of $0.50 par value common stock for $19,000 cash. f Borrowed $12,000 cash from a local bank, payable in three months. g. Purchased a patent (an intangible asset) for $3,000 cash. h. Built an addition to the factory for $21,000; paid $8,200 in cash and signed a three-year note for the balance i. Returned defective equipment to the manufacturer, receiving a cash refund of $1,200.Explanation / Answer
COUGAR PLASTICS COMPANY
Balance Sheet
Assets
Liabilities
Current Assets;
Current liabilities;
Cash
$20500
Accounts payable
$18000
Investments (Short-term)
$11200
Accrued liabilities payable
$2700
Accounts receivable
$3300
Note payable (short-term)
$26100
Inventory
$29000
Bank loan
$12000
Total current assets
$64000
Total current liabilities
$58800
Non-Current Assets;
Non-current liabilities;
Note receivable (long-term)
$9300
Note payable (long-term)
$60800
Equipment
$82800
Total non-current liabilities
$60800
Factory building
$111000
Total liabilities
$119600
Intangible assets
$7300
Stockholders’ Equity;
Total non-current assets
$210400
Common stock
$11300
Additional paid-in capital
$110700
Retained earnings
$32800
Total stockholders’ equity;
$154800
Total assets
$274400
Total liabilities and stockholders’ equity;
$274400
1. Balance of cash is calculated as follow;
($20000 + $19000 + $12000 + $1200 – $8600 – $5200 – $3000 – $8200 - $6700) = $20500
2. Short-term investment ($2600 + $8600) = $11200
3. Note receivable (long-term) ($2600 + $6700) = $9300
4. Equipment ($59000 + $25000 – $1200) = $82800
5. Factory building ($90000 + $21000) = $111000
6. Intangible assets ($4300 + $3000) = $7300
7. Note payable (long-term) ($48000 + $12800) = $60800
8. Note payable (short-term) ($6300 + $19800) = $26100
9. Common stock ($10300 + $1000) = $11300
10. Additional paid-in capital ($92700 + $18000) = $110700
COUGAR PLASTICS COMPANY
Balance Sheet
Assets
Liabilities
Current Assets;
Current liabilities;
Cash
$20500
Accounts payable
$18000
Investments (Short-term)
$11200
Accrued liabilities payable
$2700
Accounts receivable
$3300
Note payable (short-term)
$26100
Inventory
$29000
Bank loan
$12000
Total current assets
$64000
Total current liabilities
$58800
Non-Current Assets;
Non-current liabilities;
Note receivable (long-term)
$9300
Note payable (long-term)
$60800
Equipment
$82800
Total non-current liabilities
$60800
Factory building
$111000
Total liabilities
$119600
Intangible assets
$7300
Stockholders’ Equity;
Total non-current assets
$210400
Common stock
$11300
Additional paid-in capital
$110700
Retained earnings
$32800
Total stockholders’ equity;
$154800
Total assets
$274400
Total liabilities and stockholders’ equity;
$274400