Ethan Allen Interiors, Inc., is a leading manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Ethan Allen’s June 30, 2011, annual financial report. Amounts are in thousands.

Assume that the following events occurred in the first quarter ended September 30, 2011:
a. Issued 1,600 additional shares of stock for $1,020 in cash.
b. Purchased $3,400 in additional intangibles for cash.
c. Ordered $43,500 in wood and other raw materials for the manufacturing plants.
d. Sold equipment at its cost for $4,020 cash.
e. Purchased $2,980 in short-term investments for cash.
f. Purchased property, plant, and equipment; paid $1,830 in cash and signed additional long-term notes for $9,400.
g. Sold at cost other assets for $310 cash.
h. Declared and paid $300 in dividends.

Required:
1. Create T-accounts for each of the accounts on the balance sheet; enter the balances at June 30, 2011.
2. Record each of the transactions for the first quarter ended September 30, 2011, in the T-accounts (including referencing) and determine the ending balances.
3. Explain your response to event (c).
4. Prepare a trial balance at September 30, 2011.
5. Prepare a classified balance sheet at September 30, 2011.
6. Compute the current ratio for the quarter ended September 30, 2011. What does this suggest about Ethan Allen Interiors,Inc.?

Transcribed Image Text:

Cash and cash equivalents Short-term investments Accounts receivable Inventories Prepaid expenses and 78,519 Accounts payable 12,909 Accrued expenses payable 15,036 Long-term debt (includes the S 26,958 127.639 141,692 current portion of $19) Other long-term liabilities Common stock ($0.01 par value) Additional paid-in capital 165,032 other current assets Property, plant, and equipment Intangibles Other assets 27,009 484 359,728 501,908 19,816Other stockholders equity items 580.433) 20,372 294,853 45,128 Retained earnings