What does liquidity mean?
Liquidity refers to the measure which indicates how quickly the item can be converted into cash.
Classified balance sheet is type of balance sheet which places the assets and liabilities as per the specific category.
Liquid assets refers to the assets which can be realized into cash quickly. Cash is considered as highly liquid assets.
Benson Auto Repair had the following account balances after adjustments. Assume all accounts had normal balances.
Cash $ 4,000 Common Stock $ 20,000
Accounts Receivable 3,200 Retained Earnings, January 1 15,700
Prepaid Rent 1,900 Dividends 2,100
Office Supplies 3,000 Service Revenue 1,600
Equipment 34,800 Depreciation Expense—Equipment 300
Accumulated Depreciation—Equipment 1,600 Salaries Expense 800
Accounts Payable 5,400 Rent Expense 500
Notes Payable (long-term) 7,000 Utilities Expense 600
Supplies Expense 100
14. Prepare the closing entries for Benson at December 31.
15. What is the balance of Retained Earnings after closing entries have been recorded? (Use a T-account to determine the balance.)
The unadjusted trial balance of Walton Anvils at December 31, 2018, and the data for the adjustments follow: WALTON ANVILS Unadjusted Trial Balance December 31, 2018 Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Retained Earnings Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Balance $ 13,480 $ 62,100 $ 62,100 7,100 $ 1,000 23,000 6,000 4,600 24,000 4,500 19,500 2,500 14,500 2,320 1,700 Total Adjustment data: a. Unearned Revenue still unearned at December 31, $1,800. b. Prepaid Rent still in force at December 31, $2,100. c. Office Supplies used, $1,500. d. Depreciation, $390. e. Accrued Salaries Expense at December 31, $200. Requirements 1. Open the T-accounts using the balances in the unadjusted trial balance. 2. Complete the worksheet for the year ended December 31, 2018 (optional). 3. Prepare the adjusting entries, and post to the accounts. 4. Prepare an adjusted trial balance. 5. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 6. Prepare the closing entries, and post to the accounts. 7. Prepare a post-closing trial balance. 8. Calculate the current ratio for the company
Mountain View Services had the following unadjusted balances at December 31, 2018:
Salaries Payable, $0; and Salaries Expense, $1,900. The following transactions havetaken place at the end of 2018 and beginning of 2019:
Dec. 31 Accrued Salaries Expense at December 31, $8,000.
31 Closed the Salaries Expense account.
Jan. 1 Reversed the accrued salaries. (Requirement 3 only)
4 Paid salaries of $8,500. This payment included the Salaries Payable amount,
plus $500 for the first few days of January.
1. Open T-accounts for Salaries Payable and Salaries Expense using their unadjustedbalances at December 31, 2018.
2. Journalize the entries assuming Mountain View Services does not use reversing entries. Do not record the reversing entry on Jan. 1. Post to the accounts.
3. Open new T-accounts for Salaries Payable and Salaries Expense using their unadjusted balances at December 31, 2018. Journalize the entries assuming Mountain
View Services uses reversing entries. Don’t forget to record the reversing entry on Jan. 1. Post to the accounts. Compare the balances on January 4, 2019 with Requirement 2 balances on January 4, 2019.
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