On January 1 of the current year, three individuals
organized Northwest Company as a corporation. Each individual invested $10,000
cash in the business. On December 31 of the current year, they prepared a list
of resources owned (assets) and debts owed (liabilities) to support a company
loan request for $71,000 submitted to a local bank. None of the three investors
had studied accounting. The two lists prepared were as follows:
Company resources
Cash $ 14,000
Service supplies inventory (on hand) 8,500
Service trucks (four, practically new) 132,000
Personal residences of organizers (three houses) 170,000
Service equipment used in the business (practically new) 30,000
Bills due from customers (for services already completed) 24,500
Total $ 379,000
Company obligations
Unpaid wages to employees $ 20,000
Unpaid taxes 8,500
Owed to suppliers
11,000
Owed on service trucks and equipment (to a finance company) 45,000
Loan from organizer
14,500
Total $ 99,000
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