Brewer Company Has the Following Selected Accounts After Posting Adjusting

question 99

Essay

Brewer Company has the following selected accounts after posting adjusting entries:
$\begin{array}{lr}\text { Accounts Payable } & \$ 55,000 \\\text { Notes Payable, 3-month } & 90,000 \\\text { Accumulated Depreciation-Equipment } & 14,000 \\\text { Notes Payable, 5-year, 8\% } & 75,000 \\\text { Payroll Taxes Expense } & 6,000 \\\text { Interest Payable } & 5,000 \\\text { Mortgage Payable } & 180,000 \\\text { Sales Taxes Payable } & 23,000\end{array}$

Instructions
(a) Prepare the current liability section of Brewer Company's balance sheet, assuming $12,000 of the mortgage is payable next year.
(b) Comment on Brewer's liquidity, assuming total current assets are $450,000.

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Definitions:

Net Liquid

Refers to the amount of cash or cash-equivalents a company or individual has after accounting for all liabilities.

Operating Cash Flow

The cash generated from normal business operations, indicating whether a company is able to generate sufficient cash to maintain or expand operations.

Interest Expense

The cost incurred by an entity for borrowed funds, including loans, bonds, or lines of credit.

Net Income

The remaining profit of a company after all financial obligations and taxes are taken out of its total income.