Question

The following data are adapted from the financial statements of Bridget’s Shops, Inc.:

Total Current Assets $ 1,216,000

Accumulated Depreciation 2,000,000

Total Liabilities 1,540,000

Preferred Stock 0

Debt Ratio 55%

Current Ratio 1.60

Prepare Bridget’s condensed balance sheet as of December 31, 2018.

Short answer

Answer

Total Assets = $2,800,000, Total Liabilities and stockholders’ equity = $2,800,000

Step-by-step solution

Working Notes

Current Ratio= Current Assets/ Current Liabilities

1.60= $1,216,000/ Current Liabilities

Current Liabilities= $1,216,000/1.6

=$760,000

Hence Current Liabilities =$760,000

Debt Ratio = Total Liabilities / Total Assets

0.55=$1,540,000/Total Assets

Total Assets = $2,800,000

Therefore, Total Assets =$2,800,000

Preparation of Balance Sheet

BALANCE SHEET
Bridget’s Shops, Inc.
Dec. 31,2018
Current Assets	$1,216,000
Other Assets ($2,800,000-1,216,000)	1,584,000
Total Assets	$2,800,000
Current Liabilities	$760,000
Long Term Liabilities ($1,540,000-760,000)	780,000
Total Liabilities	1,540,000
Stock Holder’s equity ($2,800,000-1,540,000)	1,260,000
Total Liabilities and stockholders equity	$2,800,000