Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 9.1E
Current Liabilities
The following items are accounts on Smith’s balance sheet of December 31, 2016:
Required
Identify which of the accounts should be classified as a current liability on Smith’s balance sheet. For each item that is not a current liability, indicate the category of the balance sheet in which it would be classified. Assume the company has the following balance sheet categories: current asset; property, plant, and equipment; long-term investment; intangible asset; current liability; long-term liability; and stockholders’ equity.
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The following is a December 31, 2021, post-ciosing trial balance for the Jackson Corporation.
Account Title
Cash
Accounts receivable
Inventory
Prepaid rent (for the next 8 months)
Investment in equity securities (short term)
Hachinery
Accumulated depreciation
Patent (net)
Accounts payable
Salaries payable
Income taxes payable
Bonds payable (due in 10 years)
Comnon stock
Retained earnings
Debits Credits
$ 44,000
38,000
79,000
20,000
14,000
165,000
$ 15,000
83,000
10,000
6,000
36,000
180,000
140,000
56,000
Totals
$443,000
$443,000
Required:
Prepare a classified balance sheet for Jackson Corporation at December 31, 2021, by properly classifying each of the accounts.
(Amounts to be deducted should be Indicated by a minus sign.)
Page 1
Calculate the following ratios from the income statement and balance sheet all are required
1-Payables Turnover
2-Debt-Equity Ratio
3-Debt Ratio
4-Total Asset Turnover
5-Fixed Asset Turnover
Statement of financial positionas at 31 December 2018
2018
2017
Note
RO
RO
ASSETS
Non-current assets
Property, plant and equipment
14
8,407,572
9,300,442
Deferred tax assets
12
40,977
18,550
8,448,549
9,318,992
Current assets
Inventories
15
430,885
422,421
Trade and other receivables
16
1,129,440
1,235,724
Due from related parties
24
70,300
73,050
Cash and bank balances
17
6,856,734
6,439,709
Total current assets
8,487,359
8,170,904
Total assets
16,935,908
17,489,896
EQUITY…
Following are the current asset and current liability sections of the balance sheets for Freedom Inc. at January 31, 2020 and 2019 (in
millions):
Current Assets
Cash
Accounts receivable
Inventories
Total current assets
Current Liabilities
Note payable
Accounts payable
Other accrued liabilities
Total current liabilities
January
31, 2020
Working capital
Current ratio
6
EL EL
$ 21
$ 15
January
31, 2019
01/31/2020 01/31/2019
9
18
$ 25
Required:
a. Calculate the working capital and current ratio at each balance sheet date. (Enter "Working capital" in millions of dollars (1.e..
10,000,000 should be entered as 10). Round your "Current ratio" to 2 decimal places.)
$12
b. Evaluate the firm's liquidity at each balance sheet date.
Based on the working capital and current ratio measures, the firm has become more liquid over the 2-year period.
O Based on the working capital and current ratio measures, the firm has become less liquid over the 2-year period.
c. Assume that the firm operated at a loss…
Chapter 9 Solutions
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