Finances

Problem 2-3

Ruth Corporation

Balance Sheet

At December 31, 2014

Assets

Current Assets

Cash 13,230

Accounts Receivable 23,450

Inventory 45,730

Office Supplies 2,340

Prepaid rent 1,500

Total Current Assets 86,250

Investments

Long term investments 85,000

Property, plant, and equipment

Land 250,000

Buildings 200,000

Less accumulated Depreciation 40,000 =160,000

Automobiles 112,500

Less accumulated Depreciation 22,500 =90,000

Total Property, plant and equipment 500,000

Intangible Assets

Patents 40,000

Total Assets 711,250

Liabilities

Current Liabilities

Accounts Payable 18,255

Salaries and Wages Payable 4,200

Income taxes payable 6,200

Interest payable 1,500

Notes payable due June 30 2015 10,000

Total Current Liabilities 40,155

Long Term Debt

Bonds Payable due December 31 2018 160,000

Total Liabilities 200,155

Stockholder’s Equity

Contributed Capital

Capital Stock, $10 per value 150,000

Paid in capital in excess of per value 50,000

Total Contributed Equity 200,000

Retained Earnings 311,095

Total Stockholder’s Equity 511,095

Total liabilities and stockholder’s equity 711,250

Ruth’s Current Ratio is 2.15

Ruth does appear to be liquid based off the current ratio

Problem 2-6

Shaw Corporation

Income Statement (Single Step Format)

Revenues

Sales 48,300

Rent Revenue 6,700

Interest 1,340

Total Revenues 56,340

Expenses

Advertising 1,500

Commissions 2,415

Cost of Goods Sold 29,200

Depreciation –Office 2,900

Income Tax expense 1,540

Insurance 2,250

Interest 1,400

Salaries and wages 12,560

Supplies 890

Total Expenses 54,655

Net Income 1,685

A primary weakness I see with a single step type of income statement is that revenues and expenses aren’t classifies to aid a user in associating the expense...