Working Capital and Liquidity The following balance sheet accounts and amounts are found at year-end on the books of Thorson Products Corporation:

a. Prepare a classified balance sheet in good form.

b. Compute the amount of Thorson’s working capital.

c. At the beginning of the current period, Thorson reported total current assets of $120,000 and current liabilities of $55,000. Compute the current ratios for Thorson at the beginning and end of the period. Has the current ratio improved or declined during the period?

d. At the beginning of the current period, working capital was $65,000. Has Thorson’s working capital position and its overall liquidity improved or declined during the year?

e. How might Thorson evaluate whether or not its working capital position and overall liquidity are adequate?

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Buildings and equipment $230,000 Bonds payable 125,000 Accumulated depreciation 90,000 Inventory 80,000 Additional paid-in capital 70,000 Accounts receivable 62,000 Retained earnings 60,000 Capital stock 50,000 Land 45,000 Accounts payable 47,000 Cash 44,000 Trademarks 35,000 Unearned service revenue 26,000 Wages payable 20,000 Taxes payable 16,000 Prepaid insurance Tax refund receivable 5,000 3,000