Selected accounts of Blossom Irrigation Systems at December 31, 2011, follow:

Requirements 

1. Prepare the company’s classified balance sheet in report form at December 31, 2011.

2. Compute the company’s current ratio and debt ratio at December 31, 2011. At December 31, 2010, the current ratio was 1.65 and the debt ratio was 0.43. Did its ability to pay debts improve or deteriorate, or did it remain the same during 2011?

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Insurance expense Note payable, long-term Other assets Building Prepaid insurance $ 500 Accounts payable $34,000 4,000 Accounts receivable 38,900 1,900 Accumulated depreciation-building 44,900 55,000 Common stock 8,700 4,600 Accumulated depreciation- Salary expense 16,400 equipment 7,800 Salary payable 4,100 Cash 11,000 Service revenue 72,900 Interest payable 600 Supplies 3,500 Retained earnings, December 31, 2011 34,600 Unearned service revenue 1,600 Equipment 25,400