Use the data for Great Gadget, Inc., from E4-32B.

Requirements 1. Prepare Great Gadget’s classified balance sheet. Use the account format. The balance shown for retained earnings represents the balance prior to closing the temporary accounts for the year.

2. Calculate the current ratio.

3. The current ratio for 2009 was 3.62. Did the current ratio improve or deteriorate during 2010?

4-32

The account balances for Great Gadget, Inc., for the year ended December 31, 2010, are presented next in random order:

Transcribed Image Text:

Cash.. Equipment... $ 9,300 Cost of Goods Sold. $135,000 39,800 Accumulated Depreciation, Accounts Payable. 6,300 Equipment....... 13,700 Common Stock. 25,000 Unearned Revenues 1,900 Long-Term Notes Payable....... 35,000 Sales Revenue... 257,000 General Expenses. 18,200 Accounts Receivable 4,500 Wages Payable.. 1,300 Accumulated Depreciation, Supplies.. 3,300 Building... 25,900 Building... 130,000 Mortgage Payable Sales Returns and (Long-Term) 43,500 Allowances. 2,900 Dividends.. 41,000 Prepaid Rent 2,600 Sales Discounts 1,500 Retained Earnings... 25,700 Selling Expenses 43,500 Inventory... 3,700