Q22E
Question
The following data are adapted from the financial statements of Bridget’s Shops, Inc.:
Total Current Assets $ 1,216,000
Accumulated Depreciation 2,000,000
Total Liabilities 1,540,000
Preferred Stock 0
Debt Ratio 55%
Current Ratio 1.60
Prepare Bridget’s condensed balance sheet as of December 31, 2018.
Step-by-Step Solution
Verified Answer
Answer
Total Assets = $2,800,000, Total Liabilities and stockholders’ equity = $2,800,000
1Step 1: Working Notes
Current Ratio= Current Assets/ Current Liabilities
1.60= $1,216,000/ Current Liabilities
Current Liabilities= $1,216,000/1.6
=$760,000
Hence Current Liabilities =$760,000
Debt Ratio = Total Liabilities / Total Assets
0.55=$1,540,000/Total Assets
Total Assets = $2,800,000
Therefore, Total Assets =$2,800,000
2Step 2: Preparation of Balance Sheet
| BALANCE SHEET | |
| Bridget’s Shops, Inc. | |
| Dec. 31,2018 | |
| Current Assets | $1,216,000 |
| Other Assets ($2,800,000-1,216,000) | 1,584,000 |
| Total Assets | $2,800,000 |
| Current Liabilities | $760,000 |
| Long Term Liabilities ($1,540,000-760,000) | 780,000 |
| Total Liabilities | 1,540,000 |
| Stock Holder’s equity ($2,800,000-1,540,000) | 1,260,000 |
| Total Liabilities and stockholders equity | $2,800,000 |
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