compute the company rsquo s current ratio and debt ratio at december 31 2012 at dece 559642

Preparing a classified balance sheet in report form, and using the current and debt ratios to evaluate a company Selected accounts of Blume Irrigation System at December 31, 2012, follow:

Insurance expense

$ 900

Accounts payable

$24,700

Note payable, long term

2,800

Accounts receivable

43,100

Other assets

2,200

Accumulated depreciation—building

24,000

Building

55,800

Blume, capital, December 31, 2011

52,000

Prepaid insurance

4,000

Accumulated depreciation—equipment

7,900

Salary expense

16,300

Cash3

11,000

Salary payable

3,900

Interest payable

400

Service revenue

74,800

Blume, drawing

2,000

Supplies

3,300

Equipment

23,000

Unearned service revenue

1,600

Depreciation expense

30,500

Requirements

1. Prepare the company’s classified balance sheet in report form at December 31, 2012.

2. Compute the company’s current ratio and debt ratio at December 31, 2012. At December 31, 2011, the current ratio was 1.81 and the debt ratio was Did the company’s ability to pay debts improve or deteriorate, or did it remain the same during 2012?

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