Higgins Company has been operating for one year (2014). You are a member of the management team investigating expansion ideas that will require borrowing funds from banks. At the start of 2015, Higgins’s T-account balances were as follows:  Assets:Cash Short-Term Investments Property and Equipment4,400      2,600      3,200       Liabilities:Short-Term Notes Payable Long-Term Notes Payable       1,500          390            Stockholders’ Equity:Common Stock Additional Paid-in Capital Retained Earnings   660          2,640          5,010        The following transactions occured in 2015:(a) Borrowed $3,100 from a local bank, signing a note due in three years.(b) Sold $1,400 of the investments for $1,400 cash.(c) Sold one-half of the property and equipment for $1,600 in cash.(d) Declared and paid $360 in cash dividends to stockholders. Required:1.Using the data from these T-accounts, determine the amounts for the following on January 1, 2015:

Question
Asked Sep 15, 2019
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Higgins Company has been operating for one year (2014). You are a member of the management team investigating expansion ideas that will require borrowing funds from banks. At the start of 2015, Higgins’s T-account balances were as follows:

  
Assets:
Cash   Short-Term Investments   Property and Equipment

4,400  

 

  

 

2,600  

 

  

 

3,200  

 

  

  
Liabilities:
Short-Term Notes Payable   Long-Term Notes Payable    

  

 

  1,500      

 

  

 

390      

 

 

 

 

  
Stockholders’ Equity:
Common Stock   Additional Paid-in Capital   Retained Earnings

  

 

660      

 

  

 

2,640      

 

  

 

5,010        


The following transactions occured in 2015:
(a)  Borrowed $3,100 from a local bank, signing a note due in three years.
(b)  Sold $1,400 of the investments for $1,400 cash.
(c)  Sold one-half of the property and equipment for $1,600 in cash.
(d)  Declared and paid $360 in cash dividends to stockholders.

 

Required:
1.

Using the data from these T-accounts, determine the amounts for the following on January 1, 2015:


 
 
 
 
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Expert Answer

Step 1

Working Note: Jour...

Journal entry in the books of Higgins Company
Particulars
Ref
Debit
Credit
Date
Cash A/c
3100
Dr
To Notes Payable
3100
(being, amount borrowed from Bank)
Cash A/c
Dr
1400
To Short-term Investment A/c
1400
(Being, short-term investments sold)
Cash A/c
To Property and Equipment a/c
Dr
1600
1600
(Being, property and equipment sold)
Dividend A/c
Dr
360
To Cash A/c
360
(Being cash dividend declared and paid)
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Journal entry in the books of Higgins Company Particulars Ref Debit Credit Date Cash A/c 3100 Dr To Notes Payable 3100 (being, amount borrowed from Bank) Cash A/c Dr 1400 To Short-term Investment A/c 1400 (Being, short-term investments sold) Cash A/c To Property and Equipment a/c Dr 1600 1600 (Being, property and equipment sold) Dividend A/c Dr 360 To Cash A/c 360 (Being cash dividend declared and paid)

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