Prepare classified balance sheet; discuss current/debt ratio
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The accounts of Dutch's Travel Agency at December 31, 2006, 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 Dutch, capital, December 31, 2005 49,800
Jill Dutch, 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
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, 2006. Show totals for total assets, total liabilities and total liabilities and owner's equity.
Compute Dutch's current ratio and debt ratio at December 31, 2006. At December 31, 2005, the current ratio was 1.52 and the debt ratio was 0.37. Did Dutch's ability to pay debts improve or deteriorate during 2006?
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Solution Summary
The expert prepares classified balance sheet. The current/debt ratios are discussed.
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Please see the attached Excel spreadsheet.
Assets $ $
Current Assets Commission Revenue $93,500
Cash $6,500
Accounts Receivable $6,600 Advertising Expense $2,200
Interest Receivable $200 Depreciation Expense $1,300
Prepaid Insurance $1,100 Insurance Expense $800
Prepaid Rent $6,600 Salary Expense $24,600
Supplies $2,500 Supplies Expense $5,700
Total Current Assets $23,500
Net Income $58,900
Long Term ...
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