Question

Superior Hardwood Company distributes hardwood products to small furniture manufacturers. The adjusted trial balance data given below is from the firm’s worksheet for the year ended December 31, 2019.

ACCOUNTS	Debit			Credit
Cash	$	23,700
Petty Cash Fund		400
Notes Receivable, due 2020		11,400
Accounts Receivable		92,000
Allowance for Doubtful Accounts				$	5,600
Merchandise Inventory		230,000
Warehouse Supplies		2,820
Office Supplies		1,380
Prepaid Insurance		9,000
Land		42,000
Building		174,000
Accumulated Depreciation—Building					51,600
Warehouse Equipment		35,000
Accumulated Depreciation—Warehouse Equipment					16,200
Delivery Equipment		49,000
Accumulated Depreciation—Delivery Equipment					18,800
Office Equipment		23,000
Accumulated Depreciation—Office Equipment					10,800
Notes Payable, due 2020					19,800
Accounts Payable					38,600
Interest Payable					540
Mortgage Payable					59,000
Loans Payable, Long-term					15,000
Charles Ronie, Capital (Jan. 1)					436,760
Charles Ronie, Drawing		126,600
Income Summary		240,000			230,000
Sales					1,677,000
Sales Returns and Allowances		17,800
Interest Income					1,540
Purchases		763,000
Freight In		13,400
Purchases Returns and Allowances					8,040
Purchases Discounts					10,760
Warehouse Wages Expense		195,600
Warehouse Supplies Expense		6,700
Depreciation Expense—Warehouse Equipment		5,400
Salaries Expense—Sales		265,200
Travel and Entertainment Expense		21,100
Delivery Wages Expense		59,930
Depreciation Expense—Delivery Equipment		9,400
Salaries Expense—Office		70,200
Office Supplies Expense		3,600
Insurance Expense		5,800
Utilities Expense		8,890
Telephone Expense		6,120
Payroll Taxes Expense		57,000
Property Taxes Expense		5,200
Uncollectible Accounts Expense		5,400
Depreciation Expense—Building		8,600
Depreciation Expense—Office Equipment		3,600
Interest Expense		7,800
Totals	$	2,600,040		$	2,600,040

Required:

1. Prepare a classified income statement for the year ended December 31, 2019. The expense accounts represent warehouse expenses, selling expenses, and general and administrative expenses.
2. Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the period.
3. Prepare a classified balance sheet as of December 31, 2019. The mortgage payable extends for more than a year.

Analyze:
What is the current ratio for this business?

Answer 1