Question

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1) Prepare an income statement for the year. Wildhorse Co. did not issue any new stock during the year.

2) Prepare a retained earnings statement for the year. Wildhorse Co. did not issue any new stock during the year.

3) Prepare a classified balance sheet at July 31.

4) Compute the current ratio and debt to assets ratio.

Exercise 2-09 a-c These financial statement items are for Wildhorse Co. at year-end, July 31, 2022. Salaries and wages payable Salaries and wages expense Supplies expense Equipment Accounts payable Service revenue Rent revenue Notes payable (due in 2025) Common stock Cash Accounts receivable Accumulated depreciation equipment Dividends Depreciation expense Retained earnings (beginning of the year) $ 3,600 59,300 17,400 15,580 4,800 67,900 10,300 3,300 16,000 37,420 11,300 7,800 4,000 4,000 35,300

Answer 1

1. Income Statement:

Wildhorse Co.
Income Statement
For the year ended July 31,2022
Revenues:
Service revenue	$67,900
Rent revenue	$10,300
Total revenues		$78,200
Expenses:
Salaries and wages expense	$59,300
Supplies expense	$17,400
Depreciation expense	$4,000
Total expenses		$80,700
Net income(Loss)		($2,500)

2.Statement of retained earnings:

Wildhorse Co.
Statement of retained earnings
For the year ended July 31,2022
Retained earnings, Beginning	$35,300
(Less): Net loss	($2,500)
Balance	$32,800
(Less):Dividends	($4,000)
Retained earnings, Ending	$28,800

3.Classified Balance Sheet:

Wildhorse Co.
Balance Sheet
As of July 31,2022
Assets		Liabilities and stockholders' equity
Current Assets:		Current liabilities:
Cash	$37,420	Accounts payable	$4,800
Accounts receivable	$11,300	Salaries and wages payable	$3,600
Total current assets	$48,720	Total current liabilities	$8,400
		Notes payable (due in 2025)	$3,300
Property,plant,and equipment:		Total liabilities	$11,700
Equipment	$15,580
Accumulated depreciation-equipment	($7,800)	Stockholders' equity:
Property,plant,and equipment-Net	$7,780	Common stock	$16,000
		Retained earnings	$28,800
		Total stockholders' equity	$44,800
Total assets	$56,500	Total liabilities and stockholders' equity	$56,500

4.Current ratio = Current assets ÷ Current liabilities = 48,720/8,400 = 5.8

Debt to asset ratio = Total debt ÷ Total assets = 11,700/56,500 = 0.20708 = 20.708%