Jessica and David are student interns at Balanced Books Bookkeeping. They have taken several business math and accounting classes and 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 assignments and learn from each other. Their most recent assignment is to take a listing of accounts provided by one of Balanced Books' clients and turn them into a balance sheet and income statement. David suggests that their client might appreciate it if they also performed a vertical analysis of each statement. Jessica suggests that they should also compute the current ratio and the acid-test ratio.
Create the financial statements for December 31, 2011, depict them in vertical format, and compute the current and acid test ratios.

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Account title Account title Amount $4,000 2,000 Amount $3,500 15,000 6,000 120,000 Accounts payable Merchandise inventory Accounts receivable Net sales Insurance payable Equipment |Cash Depreciation Carlton, equity Cost of goods sold Rent expense Wages payable Utilities Miscellaneous expenses 34,500 85,000 15,000 1,500 6,500 1,500 500 15,000 8,000 Wages