Jessica & David are student interns at Balance Books Bookkeeping. they have taken several busness math accounting classes & are now applying what they have learned to real-life situations. they enjoy their internship, but they are sometimes surprised by the assignments they are given. Luckily, they work together, so they share the ssignments & learn from each other. Their most recent assignment is to take a listing ofaccoutsprovided by one of balanced Books' clients & turn them into a balance sheet & income sheet & income statement. David suggests that their client might appreciate it if they also performed a verticalanalysis ofeach statment. Jessica suggests that they should also copute the surrent ratio & the acid-test ratio.
Please show step by step solution.
1. Create the financial statements for Dec 31, 2011, depict them in vertical format, & copute the current & acid test ratios.
Account Title Amount Account Title Amount
Cash $ 4,000 Acountspayable $ 3,500
Depreciation 2,000 Merchandise inventory 15,000
Carlton, equity 34,500 Accounts receivables 6,000
Cost of goods sold 85,000 Net sales 120,000
Rent expense 15,000 Insurance payable 500
Wages payable 1,500 Equipment 15,000
Utilities 6,500 Wages 8,000
Miscellaneous expenses 1,500