Chapter 15: Q22E (page 843)

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.

Short Answer

Expert verified

Answer

Total Assets = $2,800,000, Total Liabilities and stockholders’ equity = $2,800,000

Step by step solution

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

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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Theta Designs INC
Vertical Analysis
For the year ended December 31, 2017, and 2018
Assets	2018 (\()	2017 (\))

Total current assets	25,000	73,440
Property, Plant and Equipment, Net	153,600	168,300
Other Assets	21,400	64,260
Total Assets	200,000	306,000

Liabilities
Total current liabilities	27,600	49,266
Long term debt	72,400	208,998
Total Liabilities	100,000	258,264

Stockholders’ Equity
Total stockholders’ Equity	100,000	47,736
Total liabilities and stockholders’ equity	200,000	306,000

	All digital	Green Zone
Net sales revenue (all on credit)	\(417,925	\)493,115
Cost of goods sold	209,000	258,000
Interest expenses	0	14,000
Net income	58,000	72,000

	All digital	Green Zone
Current assets:
Cash	\(23,000	\)18,000
Short-term investment	37,000	17,000
Accounts receivables, Net	39,000	49,000
Merchandise inventory	64,000	102,000
Prepaid expenses	21,000	17,000
Total current assets	\(184,000	\)203,000
Total assets	\(263,000	\)326,000
Total current liabilities	105,000	99,000
Total liabilities	105,000	134,000
Common stock:
\(1 par (10,000 shares)	10,000
\)2 par (14,000 shares)		28,000
Total stockholder’s equity	158,000	192,000
Market price per share of common stock	92.80	128.50
Dividend paid per common share	1.20	0.90

	All digital	Green Zone
Balance sheet:
Accounts receivables, Net	\(41,000	\)54,000
Merchandise inventory	81,000	89,000
Total assets	258,000	277,000
Common stock:
\(1 par (10,000 shares)	10,000
\)2 par (14,000 shares)		28,000

Short Answer

Step by step solution

Working Notes

Preparation of Balance Sheet

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The following data are adapted from the financial statements of Bridget’s Shops, Inc.:Total Current Assets $ 1,216,000Accumulated Depreciation 2,000,000Total Liabilities 1,540,000Preferred Stock 0Debt Ratio 55%Current Ratio 1.60Prepare Bridget’s condensed balance sheet as of December 31, 2018.

Short Answer

Step by step solution

Working Notes

Preparation of Balance Sheet

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Change Management

Financial Performance

Intermediate Accounting

Organizational Communication

Influences On Business

Corporate Finance

Study anywhere. Anytime. Across all devices.