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    Classified balance sheet and ratios for Dobbler Travel

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    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
    Building 104,400
    Cash 6,500
    Commission revenue 93,500
    Depreciation expense 1,300
    Furniture 22,700
    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 2,500
    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?

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    Solution Preview

    The current ratio:
    Current assets divided by current liabilities
    23500 / 19700 = ...

    Solution Summary

    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.