Question

Classified Balance Sheet The following balance sheet items, listed in alphabetical order, are available from the records of Ruth Corporation at December 31, 2017: Accounts payable $19,330 Income taxes payable $5,640 Accounts receivable 24,820 Interest payable 1,635 Accumulated depreciation - automobiles 21,580 Inventory 47,320 Accumulated depreciation - buildings 42,350 Land 255,000 Automobiles 107,900 Long-term investments 76,810 Bonds payable, due December 31, 2021 145,000 Notes payable, due June 30, 2018 10,000 Buildings 211,750 Office supplies 2,535 Capital stock, $10 par value 165,000 Paid-in capital in excess of par value 45,000 Cash 12,835 Patents 38,000 Prepaid rent 1,585 Retained earnings 318,525 Salaries and wages payable 4,495

1. Prepare in good form a classified balance sheet as of December 31, 2017.

Ruth Corporation
Balance Sheet
December 31, 2017
Assets
Current assets:
Total current assets
Property, plant, and equipment:
Total property, plant, and equipment
Intangible assets:
Total assets
Liabilities
Current liabilities:
Total current liabilities
Long-term debt:
Total liabilities
Stockholders' Equity
Contributed capital:
Total contributed capital
Total stockholders' equity
Total liabilities and stockholders' equity

2. Compute Ruth's current ratio. Round your answer to two decimal places.
fill in the blank 76cceb0a3018fb3_1 to 1

3. On the basis of your answer to (2), does Ruth appear to be liquid?

Answer 1

• [1]

Ruth Corporation
Balance Sheet
December 31, 2017
Assets
Current assets:
Cash		$12,835
Account receivables		$24,820
Inventory		$47,320
Office Supplies		$2,535
Prepaid Rent		$1,585
Total current assets			$89,095
Long Term Investments			$76,810
Property, plant, and equipment:
Land		$255,000
Automobiles	$107,900
Accumulated Depreciation - Automobile	($21,580)	$86,320
Building	$211,750
Accumulated Depreciation - Building	($42,350)	$169,400
Total property, plant, and equipment			$510,720
Intangible assets:
Patents			$38,000
Total assets			$714,625
Liabilities
Current liabilities:
Accounts Payable		$19,330
Income taxes payable		$5,640
Interest Payable		$1,635
Salaries & Wages payable		$4,495
Notes Payable		$10,000
Total current liabilities			$41,100
Long-term debt:
Bonds Payable			$145,000
Total liabilities			$186,100
Stockholders' Equity
Contributed capital:
Capital Stock		$165,000
Paid in Capital in excess of Par		$45,000
Total contributed capital			$210,000
Retained earnings			$318,525
Total stockholders' equity			$528,525
Total liabilities and stockholders' equity			$714,625

• [2]

A	Total current assets	$89,095
B	Total current liabilities	$76,810
C = A/B	Current Ratio	1.16	Answer

• [3]

No, not exactly.
Current ratio that is deemed to be good is 2:1. Here its 1.16:1