The accounts of Doppler Travel Agency at December 31, 19X6, are listed in alphabetical order.
Accounts payable $ 5,100
Accounts receivable 6,600
Accumulated depreciation - building 37,800
Accumulated depreciation - furniture 11,600
Advertising expense 2,200
Commission revenue 93,500
Depreciation expense 1,300
Insurance expense 800
Interest payable 600
Interest receivable 200
Jill Doppler, capital, December 31, 19X5 49,800
Jill Doppler, withdrawals 47,400
Note payable, long-term 27,800
Note receivable, long-term 4,000
Other assets 3,600
Other current liabilities 4,700
Prepaid insurance 1,100
Prepaid rent 6,600
Salary expense 24,600
Salary payable 3,900
Supplies expense 5,700
Unearned commission revenue 5,400
1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Prepare the company's classified balance sheet in report format at December 31, 19X6. Show totals for total assets, total liabilities and total liabilities and owner's equity.
2. Compute Doppler's current ratio and debt ratio at December 31, 19X6. At December 31, 19X5, the current ratio was 1.52 and the debt ratio was 0.37. Did Doppler's ability to pay debts improve or deteriorate during 19X6?
The current ratio:
Current assets divided by current liabilities
23500 / 19700 = ...
The solution presents a classified balance sheet in proper form for Dobbler Travel Agency plus calculations for a current ratio and a debt ratio. The ratios show the calculations and include a conclusion about the change from the prior year.