From the information given prepare a classified balance sheet and also determine

Question

From the information given prepare a classified balance sheet and also determine the current ratio and evaluate it assuming the industry average is 1.7

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Explanation / Answer

Assest Cash           5,000 Account Recievable         70,770 Office Supplies           2,200 Prepaid Insurance           2,500 Office Equpment                     59,600 less : Accu. Depreciation                     10,260         49,340 Total Assets       129,810 Liabilities Accounts Payable         14,400 Salaries Payable           2,700 Bill Klein Capital       112,710 Total Liabilities       129,810 Current ratio= Current Assets/Current Liabilities Current Assets = 5000+70770+2500= 78270 Current Liabilities 14400+2700 17100 Current ratio 78270/17100= 4.58:1 So Average Industry norms is 1.7 but for this it is 4.58 so it's showing company current assets is 4.58 more than current Liabilities

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