Q1) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.

(1) Investors invest $500,000 in exchange for 50,000 shares of common stock.

(2) Company purchased equipment for $25,000 on account.

(3) Company paid Rent for $4,000.

(4) Company received $15,000 for services not yet performed.

(5) Employees work Monday through Friday and are paid on Friday. Salary expense is $10,000 per day and this year, December 31 falls on a Wednesday.

Q2) The following items are taken from the financial statements of Lacey Company for 2012:

Advertising Expense $14,000

Accounts Receivable 12,000

Cost of Goods Sold 65,000

Accumulated Depreciation-Equipment 20,000

Accounts Payable 21,000

Cash 44,000

Depreciation Expense 17,000

Common Stock 100,000

Dividends 25,000

Insurance Expense 5,000

Note Payable (due 2014) 70,000

Rent Expense 4,000

Prepaid Insurance 17,000

Retained Earnings (beginning) 22,000

Salaries Expense 50,000

Salaries Payable 3,500

Net sales 175,000

Supplies 4,000

Supplies Expense 3,000

Equipment 210,000

Q3) The following items are taken from the financial statements of SRW Company for 2012:

Cash $375,000

Accounts Receivable 125,000

Prepaid Insurance 100,000

Accounts Payable 88,000

Unearned Service Revenue 15,000

Equipment, net of accumulated depreciation 177,000

Common Stock 125,000

Retained Earnings 12/31/2011 106,000

Long-term debt 336,500

Service revenue 225,000

Cost of Goods Sold 62,500

Rent expense 30,000

Supplies expense 8,000

Insurance expense 18,000

Instructions 

(a) Please create a classified Balance Sheet in good form for the year ended 2012.

(b) Please calculate the current ratio.