Question

3 Required information of 6 PA2-3 Recording Transactions in a Journal and T-Accounts); Preparing and Interpreting the Balance Sheet [LO 2-2, LO 2-3, LO 2-4, LO 2-5) [The following information applies to the questions displayed below.] Edward Allen Interiors Inc. is a leading manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Edward Allen's September 30, 2016, trial balance. (The amounts shown represent millions of dollars.) 1 pok int Accounts Payable Accounts Receivable Cash Common Stock Equipment Inventory Notes Payable (long-term) Notes Payable (short-term) Prepaid Rent Retained Earnings Salaries and Wages Payable Software $109 10 79 376 273 160 60 3 24 20 23 45 ences Assume that the following events occurred in the following quarter. a. Paid $30 cash for additional inventory. b. Issued additional shares of common stock for $20 in cash. c. Purchased equipment for $170; paid $60 in cash and signed a note to pay the remaining $110 in two years. d. Signed a short-term note to borrow $10 cash. e. Conducted negotiations to purchase a sawmill, which is expected to cost $36. PA2-3 Part 6 6. Prepare a classified balance sheet at December 31, 2016. (Enter any decreases to account balances with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) EDWARD ALLEN INTERIORS, INC. Balance Sheet At December 31, 2016 (in millions of dollars) Assets Current Assets Cash Accounts Receivable Inventory Prepaid Rent 0 Total Current Assets Equipment Software $ 0 Total Assets Liabilities Current Liabilities Accounts Payable Notes Payable (short-term) Salaries and Wages Payable Total Current Assets 0 Total Liabilities 0 Stockholders' Equity Common Stock Retained Earnings 0 Total Stockholders' Equity Total Liabilities and Stockholders' Equity $ 0

Answer 1

PA2-3

Balance Sheet
Assets
Current assets
Cash	$                  19
Accounts receivable (net)	$                  10
Inventory	$                190
Prepaid Rent	$                  24
Total current assets		$             243
Property, plant, and equipment
Equipment	$                443
Net property, plant, and equipment		$             443
Intangible assets
Software		$               45
Total assets		$             731
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$                109
Notes payable (short-term)	$                  13
Salaries and Wages Payable	$                  23
Total current liabilities		$             145
Long-term liabilities
Notes payable (long-term)		$             170
Total liabilities		$             315
Shareholders' equity
Common stock	$                396
Retained earnings	$                  20
Total shareholders' equity		$             416
Total liabilities and shareholders' equity		$             731

S2-1

1.
Answer is d. Option D

2.
Answer is b. $42966 = $38633 + $4333

3.
Current Ratio = Current Assets / Current Liabilities
= $17724 / 14133 = 1.25
Answer is b. 1.25

4.
Answer is a.

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