Reference no: EM13583911

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