236.Calculate the current ratio in each of the following separate cases and identify the company case with the strongest liquidity position.
Current Assets
Current Liabilities
Case 1$55,000$30,000
Case 2$141,500$85,000
Case 3$45,000$59,000
Current Ratio = Current Assets/Current Liabilities
Case 1 = $55,000/$30,000 = 1.8
Case 2 = $141,500/$85,000 = 1.7
Case 3 = $45,000/$59,000 = 0.8
Case 1 has the strongest liquidity position because it has the highest current ratio.
237.Use the following partial work sheet from Carmelo Bowl, Inc. to prepare its income statement, statement of retained earnings and a classified balance sheet (Assume the stockholders did not make any investments in the business this year.)
CARMELO BOWL, Inc.
Work Sheet
For Year Ended June 30
Account
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Cash11,275
Accounts Receivable1,750
Office Supplies800
Prepaid Insurance3,400
Scoring Equipment130,000
Accumulated depreciation—Scoring equipment21,700
Salaries payable200
Common stock1,000
Retained earnings49,000
Dividends46,425
Bowling revenue137,675
Depreciation expense—Scoring equipment10,825
Salaries expense1,800
Insurance expense200
Rent expense1,600
Office supplies expense400
Repairs expense350
Telephone expense750
Totals15,925137,675193,65071,900
Net income121,750121,750
Totals137,675137,675193,650193,650
CARMELO BOWL, Inc.
Income Statement
For Year Ended June 30
Bowling Revenue$137,675
Expenses:
Depreciation expense—Scoring equipment$10,825
Salaries expense1,800
Insurance expense200
Rent expense1,600
Office supplies expense400
Repairs expense350
Telephone expense750
Total expenses15,925
Net Income$121,750
238.A partially completed work sheet is shown below. The unadjusted trial balance columns are complete. Complete the adjustments, adjusted trial balance, income statement, and balance sheet and statement of retained earnings columns.
Dustin Company, Inc.
Work Sheet
For the year ended December 31
Account
Unadjusted Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement
Balance SheetOwner's Equity
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Cash40
Accounts receivable
Prepaid insurance25
Supplies148
Office equipment340340
Accum. Depr., Office equipment45
Accounts payable5757
Rent payable
Common stock132132
Dividends3535
Fees earned300380
Rent expense6090
Utilities expense20
Insurance expense10
Supplies expense
Deprec. exp., Office equipment45
Totals534534
Net income
Totals