College Spirit sells sportswear with logos of major universities. At the end of 2009, the following balance

Question:

College Spirit sells sportswear with logos of major universities. At the end of 2009, the following balance sheet account balances were available.

Accounts payable .....................$106,300

Accounts receivable .................. 6,700

Accumulated depreciation on furniture and fixtures ...... 21,700

Bonds payable .................... 180,000

Cash ........................ 14,200

Common stock .................... 300,000

Furniture and fixtures .................. 88,000

Income taxes payable ................... 11,400

Inventory, sportswear ................... 479,400

Long-term investment in equity securities ........... $110,000

Note payable, short-term .................. 50,000

Prepaid rent, building (current) .............. 54,000

Retained earnings, 12/31/2009 ............... 82,900

Required:

1. Prepare a classified balance sheet for College Spirit at December 31, 2009.

2. Compute College Spirit’s working capital and current ratio at December 31, 2009.

Comment on College Spirit’s liquidity.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...