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In: Accounting

The following is a list of balance sheet accounts and balances (in random order) for the...

The following is a list of balance sheet accounts and balances (in random order) for the Nathan Supply Company as of December 31, 2017. Prepare a classified balance sheet for Nathan Supply Company.

Equipment $32000
Land 20,000
Retained Earnings 40,000
Note Payable (Due in 5 years) 17,000
Inventory 60,000
Allowance for Doubtful Accounts 1,000
Accounts Payable 36,000
Common Stock 30,000
Salaries Payable 10,000
Accumulated Depreciation 14,000
Cash 10,000
Accounts Receivable 26,000

  

  Nathan Supply Company
Balance sheet
As of December 31, 2017
Assets
Current Assets:
Long-term Assts:
TOtal Assets $133,000
Liabilities and Stockholder's Equity
Current Libilites:
Long-term Libilites:
Stockholders' Equity:

Total Libilites and Stockholders Equity?

B Current RRatio?

1) What is Nathans' current ratio as of December 31, 2017? show the work

2- Nathan's competitor, Oilver, has a current ratio of 2.5 Which company has a greater Likelihood of being able to pay its bills? why?

Solutions

Expert Solution

Nathan Supply Company
Balance sheet
As of December 31, 2017
Assets
Current Assets:
Cash          10,000
Accounts Receivable          26,000
Less: Allowance for doubtful accounts          (1,000)
Inventory          60,000
Total Current Assets          95,000
Long-term Assts:
Equipment          32,000
Less: Accumulated Depreciation        (14,000)
Land          20,000
Total Long Term Assets          38,000
Total Assets       133,000
Liabilities and Stockholder's Equity
Current Libilites:
Accounts Payable          36,000
Salaries Payable          10,000
Total Current Liabilities          46,000
Long-term Libilites:
Note Payable (Due in 5 years)          17,000
Total Long Term Liabilities          17,000
Stockholders' Equity:
Common Stock          30,000
Retained Earnings          40,000
Total Stockholders' Equity:          70,000
Total Liabilities and Stockholder's Equity       133,000

A:  Total Liabilities and Stockholder's Equity: $133,000

B:

1. Nathan Current Ratio: Current Ratio = (Current Assets)/(Current Liabilities) = (95000)/(46000) = 2.06

2. Oliver has a better chance of paying his bills as he has a higher current ratio. Higher current ratio indicates more liquidity as the current assets have a greater weightage in relation to current liabilities.

ekkarill92 answered 3 years ago
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