Question

eBook Calculator Classified Balance Sheet The following balance sheet items, listed in alphabetical order, are available from the records of Ruth Corporation at December 31, 2017: $17,395 $6,540 1,370 Accounts payable Accounts receivable Accumulated depreciation - automobiles Accumulated depreciation - buildings Automobiles Bonds payable, due December 31, 2021 Buildings Capital stock, $10 par value Cash 22,615 23,100 43,260 115,500 42,510 247,000 85,360 Income taxes payable Interest payable Inventory Land Long-term investments Notes payable, due June 30, 2018 office supplies Pald-in capital in excess of par value Patents Prepaid rent Retained earnings Salaries and wages payable 146,000 216,300 155,000 13,695 9,000 2,200 55,000 42,000 1,625 328,160 3,980 Required:

Answer 1

Ruth Corporation
Balance Sheet as on 31st December 2017
Description		Amount
Asset
Current Asset
Inventory	$42,510
Office Supplies	$2,200
Accounts Receivable	$22,615
Prepaid Rent	$1,625
Cash	$13,695
Total Current Asset		$82,645
Noncurrent Asset
Property Plant and Equipment
Land		$2,47,000
Automobiles	$1,15,500
Less: Accumulated Depreciation	$23,100	$92,400
Building	$2,16,300
Less: Accumulated Depreciation	$43,260	$1,73,040
Other Non-Current Asset
Long Term Investment		$85,360
Patents		$42,000
Total Asset		$7,22,445
Liabilities
Current Liabilities
Accounts Payable	$17,395
Income Tax Payable	$6,540
Interest payable	$1,370
Notes payable -Due June 30th 2018	$9,000
Salaries and Wages Payable	$3,980
Total Current Liabilities		$38,285
Noncurrent Liabilities
Binds Payable December 31, 2021		$1,46,000
Stockholders’ Equity
Capital Stock $10 par value	$1,55,000
Paid in capital in excess of par value	$55,000
Retained earnings	$3,28,160
Total Stockholders’ Equity		$5,38,160
Total Liabilities and Stockholders’ Equity		$7,22,445

2) Current Ratio

Current Ratio                     = Current Assets/Current Liabilities

Current Asset                    =             $82,645

Current Liabilities             =             $38,285

Current Ratio                     =             82,645/38285

                                                =             2.16 : 1

3) On the basis of Current Ratio calculated above, the liquidity of the Ruth is good. In this case current asset of $2.16 is available to meet (pay) the Current liability of $1