These financial statement items are for Barone Corporation at year-end, July 31, 2010. Salaries payable ............ $

Question:

These financial statement items are for Barone at year-end, July 31, 2010.
Salaries payable ............ $ 2,080
Salaries expense ............ 51,700
Utilities expense ............ 22,600
Equipment ............... 18,500
Accounts payable ............. 4,100
Commission revenue ........... 66,100
Rent revenue ............... 8,500
Long-term note payable .......... 1,800
Common stock ............. 16,000
Cash ................. 29,200
Accounts receivable ........... 9,780
Accumulated depreciation .......... 6,000
Dividends ............... 4,000
Depreciation expense ............ 4,000
Retained earnings (beginning of the year) .... 35,200

Instructions
(a) Prepare an income statement and a retained earnings statement for the year. Barone did not issue any new stock during the year.
(b) Prepare a classified at July 31.
(c) Compute the current ratio and debt to total assets ratio.
(d) Suppose that you are the president of Allied Equipment. Your sales manager has approached you with a proposal to sell $20,000 of equipment to Barone. He would like to provide a loan to Barone in the form of a 10%, 5-year note payable. Evaluate how this loan would change Barone’s current ratio and debt to total assets ratio, and discuss whether you would make the sale.

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