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Alecsey [184]
3 years ago
5

East Hill Home Healthcare Services was organized five years ago by four friends who each invested $10,000 in the company and, in

turn, were issued in total 8,000 shares of $1.00 par value common stock. To date, they are the only stockholders. At the end of last year, the accounting records reflected total assets of $700,000 ($50,000 cash; $500,000 land; $50,000 equipment; and $100,000 buildings), total liabilities of $200,000 (short-term notes payable $100,000 and long-term notes payable $100,000), and stockholders’ equity of $500,000 ($20,000 common stock; $80,000 additional paid-in capital; and $400,000 retained earnings). During the current year, the following summarized events occurred:
a. Sold 9,000 additional shares of stock to the original organizers for a total of $90,000 cash.
b. Purchased a building for $60,000, equipment for $15,000, and four acres of land for $14,000; paid $9,000 in cash and signed a note for the balance (due in 15 years). (Hint: Five different accounts are affected.)
c. Sold one acre of land acquired in (b) for $3,500 cash to another company.
d. Purchased short-term investments for $18,000 cash.
e. One stockholder reported to the company that 300 shares of his East Hill stock had been sold and transferred to another stockholder for $3,000 cash.
f. Lent one of the shareholders $5,000 for moving costs and received a signed, six-month note from the shareholder.
Required:
1. Was East Hill Home Healthcare Services organized as a sole proprietorship, a partnership, or a corporation?
2. During the current year, the records of the company were inadequate. You were asked to prepare the summary of the preceding transactions. To develop a quick assessment of their economic effects on East Hill Home Healthcare Services, you have decided to complete the tabulation that follows and to use plus (+) for increases and minus (−) for decreases for each account. The first event is used as an example.
4. Based only on the completed tabulation, provide the following amounts:
5. Compute the current ratio for the current year
Business
1 answer:
kotegsom [21]3 years ago
8 0

Answer:

1. Was East Hill Home Healthcare Services organized as a sole proprietorship, a partnership, or a corporation?

East Hill Home Healthcare Services should be considered a closed corporation since there is a small number of stockholders and its shares are not traded in an open trade market.

2. During the current year, the records of the company were inadequate. You were asked to prepare the summary of the preceding transactions.

Since there is not enough room here, I used an excel spreadsheet.        

4. What amounts do you need? If some amount is missing, look at the attached PDF.

total assets = $870,000

total liabilities = $280,000

total equity = $590,000

current assets = $134,500

current liabilities = $100,000

5. Compute the current ratio for the current year

current ratio = current assets / current liabilities = $134,500 / $100,000 = 1.345

     

Download pdf
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Operating activities have to do with the day to day operations of the business.

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This is also a day-to-day operation of the business so it falls under operating activities.

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Investing activities have to do with the purchase and sale of capital assets such as financial assets in other companies or fixed assets. The machinery purchased here is a fixed asset so this will count as an investing activity.

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6 0
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Retained earnings = retained earnings at the beginning of the year + net profits made during the current year - dividends paid out.

∴ Retained earnings = $318, 423 (opening Retained earnings)+ $11,318 (net profits / income) - $7,500 (dividends)

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3 years ago
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Answer:

3. an insurance agent and an insurance company

Explanation:

Insurance simply means protection from financial loss.

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5. Liability insurance

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An insured means a person or organization covered by insurance. They are like consumers.

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6 0
3 years ago
The illegal and unethical practice of providing old (or early) investors above-average returns on their investment with funds ra
Arada [10]

Answer:

Ponzi scheme

Explanation:

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6 0
3 years ago
Billie transferred her 20 percent interest to Jean Company as part of a complete liquidation of the company. In the exchange, sh
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Answer:

A) $200,000 loss recognized by Jean and a basis in the land of $200,000 to Billie

Explanation:

The computation is shown below:

For loss recognized, the amount would be

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3 0
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