Question

The following balance sheet items, listed in alphabetical order, are available from the records of Ruth Corporation at December 31, 2017:

Accounts payable	$18,155		Income taxes payable	$6,550
Accounts receivable	23,605		Interest payable	1,600
Accumulated depreciation - automobiles	23,490		Inventory	41,980
Accumulated depreciation - buildings	39,950		Land	246,000
Automobiles	117,450		Long-term investments	88,955
Bonds payable, due December 31, 2021	167,000		Notes payable, due June 30, 2018	9,000
Buildings	199,750		Office supplies	2,455
Capital stock, $10 par value	153,000		Paid-in capital in excess of par value	49,000
Cash	13,320		Patents	37,000
			Prepaid rent	1,515
			Retained earnings	299,850
			Salaries and wages payable	4,435

Required:

1. Prepare in good form a classified balance sheet as of December 31, 2017.

Ruth Corporation
Balance Sheet
December 31, 2017
Assets
Current assets:
		$
Total current assets			$
Property, plant, and equipment:
		$
	$
	$
Total property, plant, and equipment
Intangible assets:
Total assets			$
Liabilities
Current liabilities:
		$
Total current liabilities			$
Long-term debt:
Total liabilities			$
Stockholders' Equity
Contributed capital:
		$
Total contributed capital		$
Total stockholders' equity
Total liabilities and stockholders' equity			$

2. Compute Ruth's current ratio. Round your answer to two decimal places.
to 1

3. On the basis of your answer to (2), does Ruth appear to be liquid?

Answer 1

Requirement 1:

Ruth Corporation
Balance Sheet
December 31,2017
Current Assets:
Cash		13,320
Accounts receivable		23,605
Inventory		41,980
Office supplies		2,455
Prepaid rent		1,515
Total current assets			82,875
Long-term investments			88,955
Property,plant,and equipment:
Land		246,000
Buildings	199,750
Accumulated depreciation - buildings	-39,950	159,800
Automobiles	117,450
Accumulated depreciation - automobiles	-23,490	93,960
Total property,plant,and equipment			499,760
Intangible Assets:
Patents			37,000
Total Assets			708,590
Liabilities
Current liabilities:
Accounts payable		$18,155
Income taxes payable		$6,550
Interest payable		1,600
Salaries and wages payable		4,435
Notes payable, due June 30, 2018		9,000
Total current liabilities			39,740
Long-term debt:
Bonds payable, due December 31, 2021			167,000
Total liabilities			206,740
Stockholders' equity:
Contributed capital:
Capital stock, $10 par value		153,000
Paid-in capital in excess of par value		49,000
Total contributed capital			202,000
Retained earnings			299,850
Total stockholders' equity			501,850
Total liabilities and stockholders' equity			708,590

Requirement 2:

Current ratio = Current assets ÷ Current liabilities = 82,875/39,740 = 2.08543

Requirement 3:

Yes, because current ratio is more than 2