Preparing Balance Sheets, Computing Income, and Applying the Current and Quick Ratios

Balance sheet information for Lang Services at the end of Year $2($the most recent year$)$ and Year $1$ is:

December $31,$ Year $2$ December $31,$ Year $1$

Accounts receivable $$54,720$ $$42,000$

Notes payable $4,3203,840$

Cash $24,00019,200$

Equipment $76,80064,800$

Supplies $11,28010,080$

Accounts payable $60,00060,000$

Stockholders$$ equity $??$

a$.$ Prepare Lang Services$$ balance sheet for December $31$ of each year.

Note: List accounts in balance sheet order.

LANG SERVICES

Balance Sheets

Year $2$ Year $1$

Assets

Cash

$0$

$0$

Answer $1$

Accounts receivable

$0$

$0$

Answer $2$

Supplies

$0$

$0$

Answer $3$

Equipment

$0$

$0$

Answer $4$

Total assets

$0$

$0$

Answer $5$

Liabilities

Notes payable

$0$

$0$

Answer $6$

Accounts payable

$0$

$0$

Answer $7$

Total liabilities

$0$

$0$

Answer $8$

Stockholders$$ equity

$0$

$0$

Answer $9$

$0$

$0$

Answer $10$

b$.$ Lang Services raised $$12,000$ cash through issuing additional common stock early in Year $2,$ and it declared and paid a $$40,800$ cash dividend in December Year $2.$

Compute its net income or loss for Year $2.$

Note: Use a negative sign with your answer to indicate a net loss, if applicable.

$Answer $11$

$0$

c$.$ Calculate the current ratio and quick ratio for Year $2.$

Note: Enter the numerator and denominator amounts used to compute the ratios.

Ratio Numerator $-$: Denominator $=$ Result

Current ratio Answer $12$

$0$

$-$: Answer $13$

$0$

$=$

Quick ratio Answer $14$

$0$

$-$: Answer $15$

$0$

$=$

d$.$ Assume the industry average is $1\mathrm{.}5$ for the current ratio and $1\mathrm{.}0$ for the quick ratio. Comment on Lang$$s current and quick ratios relative to the industry.

Lang's liquidity position is Answer $16$

as its current ratio Answer $17$

the industry norm, and its quick ratio is Answer $18$

the industry average.

Please answer all parts of the question.