Question 4

Selected financial information for Blossom as of December 31, 2017, follows:

Accounts payable

$209,000

Land

$107,000

Accounts receivable

200,000

Licences

59,000

Accumulated depreciationbuilding

78,000

Long-term equity investments

44,000Building

255,000Mortgage payable

226,000

Cash

15,500

Notes payable

55,000

Goodwill

37,000

Prepaid expenses7,500

Interest payable

16,000

Salaries payable29,500

J. Chrowder, capital

95,000Supplies

11,000

Unearned revenue

27,500

Additional information:

1.

All accounts have normal balances.

2.

$17,000 of the mortgage payable will be paid before December 31, 2018.

3.

The notes payable are payable on May 17, 2018.

Make a classified balance sheet. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Building and Equipment.)

BLOSSOM

Balance Sheet

Assets

$

$

$

:

$

Liabilities and Owner's Equity

$

$

Calculate working capital, the current ratio, and the acid-test ratio. (Round current ratio and acid-test ratio answers to 2 decimal places, e.g. 1.75:1. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Working capital

$

Current ratio

: 1Acid-test ratio

: 1

Identify the company's liquidity.

The company's liquidity is improving or deteriorating?

.