Answer:
Part a
College Spirit
Classified balance sheet as at December 31, 2019.
ASSETS
Non - Current Assets
Furniture $88,000
Long-term investment $110,900
Accumulated depreciation ($23,700)
Total Non - Current Assets $175,200
Current Assets
Inventory $481,400
Prepaid rent (current) $54,000
Accounts receivable $6,700
Cash $13,300
Total Current Assets $555,400
TOTAL ASSETS $730,600
EQUITY AND LIABILITIES
EQUITY
Common shares $300,000
Retained earnings $84,500
TOTAL EQUITY $384,500
LIABILITIES
Non-Current Liabilities
Bonds payable $180,000
Total Non Current Liabilities $180,000
Current Liabilities
Accounts payable $104,700
Income taxes payable $11,400
Note payable, short-term $50,000
Total Current Liabilities $166,100
TOTAL LIABILITIES $346,100
TOTAL EQUITY AND LIABILITIES $730,600
Part b
3.34
Explanation:
A classified balance sheet shows the Assets, Liabilities and Equity in their different categories.
College Spirit’s working capital and current ratio :
Current Ratio/ Working Capital ratio = Current Assets ÷ Current Liabilities
= $555,400 ÷ $166,100
= 3.34
