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Prepare an income & retained earnings statements

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These financial statement items are for Snyder Corporation at year-end, July 31, 2007.
Salaries payable: $ 2,080
Salaries expense: 51,700
Utilities expense: 22,600
Equipment: 18,500
Accounts payable 4,100
Commission revenue: 61,100
Rent revenue: 8,500
Long-term note payable: 1,800
Common stock: 16,000
Cash: 24,200
Accounts receivable: 9,780
Accumulated depreciation 6,000
Dividends: 4,000
Depreciation expense: 4,000
Retained earnings (beginning of the year): $35,200

(a) Prepare an income statement and a retained earnings statement for the year. Snyder Corporation did not issue any new stock during the year.
(b) Prepare a classified balance sheet at July 31.
(c) Compute the current ratio and debt to total assets ratio.
(d) Suppose that you are the president of Allied Equipment. Your sales manager has approached you with a proposal to sell $20,000 of equipment to Snyder. He would like to provide a loan to Snyder in the form of a 10%, 5-year note payable. Evaluate how this loan would change Snyder's current ratio and debt to total assets ratio, and discuss whether you would make the sale.

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Solution Summary

The solution prepares an income and retained earning statement for Snyder Corporation. A classified balance sheet is given.