Teagan Fitzgerald is the owner of Newport Jewelry, a store specializing in gold,

Question

Teagan Fitzgerald is the owner of Newport Jewelry, a store specializing in gold, platinum, and special stones. During the past year, in response to increased demand, Teagan doubled her selling space by expanding into the vacant building space next door to her store. This expansion has been expensive because of the need to increase inventory and to purchase new store fixtures and equipment, including carpeting and state-of-the-art built-in fixtures. Teagan notes that the company’s cash position has gone down and she is worried about future demands on cash to finance the growth.

     Teagan presents you with a statement showing the assets, liabilities, and her equity for year-end 2015 and 2016, and asks your opinion on the company’s ability to pay for the recent expansion. She did not have income and expense data available at the time. She commented that she had not made any new investment in the business in the past two years and was not financially able to do so presently. The information presented is shown below:

    

Prepare classified balance sheets for Newport Jewelry for December 31, 2015, and December 31, 2016. (Ignore depreciation.)

Teagan Fitzgerald is the owner of Newport Jewelry, a store specializing in gold, platinum, and special stones. During the past year, in response to increased demand, Teagan doubled her selling space by expanding into the vacant building space next door to her store. This expansion has been expensive because of the need to increase inventory and to purchase new store fixtures and equipment, including carpeting and state-of-the-art built-in fixtures. Teagan notes that the company’s cash position has gone down and she is worried about future demands on cash to finance the growth.

     Teagan presents you with a statement showing the assets, liabilities, and her equity for year-end 2015 and 2016, and asks your opinion on the company’s ability to pay for the recent expansion. She did not have income and expense data available at the time. She commented that she had not made any new investment in the business in the past two years and was not financially able to do so presently. The information presented is shown below:

    

December 31, 2015 December 31, 2016   Assets     Cash $ 150,000 $ 30,000     Accounts Receivable 45,000 91,500     Inventory 105,000 234,000     Prepaid Expenses 6,000 9,000     Store Fixtures and Equipment 180,000 390,000   Total Assets $ 486,000 $ 754,500   Liabilities and Owner’s Equity   Liabilities     Notes Payable (due in 4 years) $ 90,000 $ 240,000     Accounts Payable 132,000 171,000     Salaries Payable 18,000 19,500     Total Liabilities $ 240,000 $ 430,500   Owner’s Equity   Teagan Fitzgerald, Capital 246,000 324,000     Total Liabilities and Owner’s Equity $ 486,000 $ 754,500

1.

Prepare classified balance sheets for Newport Jewelry for December 31, 2015, and December 31, 2016. (Ignore depreciation.)

NEWPORT JEWELERY Balance Sheet December 31, 2015 December 31, 2016 Assets Current Assets Total Current Assets $0 $0 Plant and Equipment Total Assets $0 $0 Liability and Owner’s Equity Current liabilities Total Current Liabilities $0 $0 Long-term liabilities Total Liabilities $0 $0 Owner’s Equity Total Liabilities and Owner’s Equity $0 $0

Explanation / Answer

Newport Jewellery

Balance Sheet

Assets Decembr 31, 2015 December 31, 2016 $ $ Cash 150,000 30,000 Accounts Receivable 45,000 91,500 Inventory 105,000 234,000 Prepaid Expenses 6,000 9,000 Total Current Assets 306,000 364,500 Plant and Equipment Store Fixtures and Equipment 180,000 390,000 Total Assets 486,000 754,500 Liabilities and Owners' Equity Liabilities Current Liabilities Accounts Payable 132,000 171,000 Salaries Payable 18,000 19,500 Total Current Liabilities 150,000 190,500 Long - term Liabilities Notes Payable ( due in 4 years) 90,000 240,000 Total Liabilities 240,000 430,500 Owner's Equity Teagan Fitzgerald, Capital 246,000 324,000 Total Liabilities and Owners' Equity 486,000 754,500

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.