Question

Prepare a classified balance sheet. Assume that $13,600 of the note payable will be paid in 2023.

The following items are taken from the financial statements of Carmen Co. at December 31, 2022.

Prepare a classified balance sheet.

Land          $195,600
Accounts receivable   21,700
Supplies   9,200
Cash   11,840
Equipment   82,400
Buildings   261,200
Land improvements   45,780
Notes receivable (due in 2023)   5,300
Accumulated depreciation—land improvements   12,600
Common stock   75,000
Retained earnings (December 31, 2022)   495,000
Accumulated depreciation—buildings   32,600
Accounts payable   9,500
Mortgage payable   93,600
Accumulated depreciation—equipment   18,720
Interest payable   3,600
Income taxes payable   14,700
Patents   46,700
Investments in stock (long-term)   71,500
Debt investments (short-term)   4,100

Also compute the current ratio and debt to assets ratio. What do the numbers mean?

Answer 1

+classified balance sheet is a financial document that bifurcates ASSETS, LIABILITIES AND SHAREHOLDER EQUITY into various sub categories. it helps user to analyze the balance sheet in accurate manner.

current assets
cash	11,840
account receivable	21,700
supplies	9,200
notes receivable	5,300
debt investment (short)	4,100
Total current assets		52,140
Long term investment
Investment in stock	71,500	71,500
Property , Plant and equipment
Land	195,600
Building	261,200
Less: accumulated depreciation	(32,600)
equipment	82,400
Less: accumulated depreciation	(18,720)
land improvements	45,780
Less: accumulated depreciation	(12,600)	457,380
Intangible assets
Patent		46,700
TOTAL ASSETS			691,400
liabilities and stockholder's equity
current liabilities
account payable	9,500
mortgage payable (DUE IN 2023)	13,600
interest payable	3,600
income tax payable	14,700
Total Current liabilities		41,400
Long term liabilities
Mortgage payable	80,000
Total long term liabilities		80,000
Total Liabilities		121,400
stock holder's equity
common stock	75,000
retained earnings	495,000
Total stockholder's equity		570,000
Total liabilities and stockholder's equity			691,400

notes recievabale are to due within 1 year so they are current assets.

2.ratios

current ratio = current assets/current liabilities

=52,140/41,400

=1.26

debt to asset ratio

debt/total assets

=121400/691,400

=0.18

analysis

current ratio above tells that company have higher current assets than current liabilities. it can pay off its current liabilities from its current assets.

debt to asset ratio tells that company have assets financed from its debt rather than equity.it shows that company have enough assets to pay off its debts.debt ratio lower than 1 is considered good.