The balance sheet below is an incorrect balance sheet of Hoover Corporation for the current year, 2017.

Please do:

a.Prepare a corrected balance sheet in good form, adjusting the amounts in each balance sheet classification as affected by the information given above.

b.Net cash provided by operating activities for Hoover Corp. is $75,000. In the year 2016, Hoover Corp. total current liabilities were $235,000. With this information and the information provided from yourcorrected balance sheet calculate the following:

1.Current ratio

2.Current cash debt coverage ratio

3.Debt to Total Asset ratio

Talk about Hoovers ability to meet its shorts-term obligations and whether or not the company is highly leveraged.

Hoover Corporation

Balance Sheet

December 31, 2017

Current assets	$ 485,000	Current liabilities	$ 380,000
	$ 640,000	Long-term liabilities	$ 1,000,000
Property, plant, and equipment	$ 1,720,000	Stockholders equity	$ 1,770,000
Intangible assets	$ 305,000
	$ 3,150,000		$ 3,150,000

Use the following information to correct, if necessary, the balance sheet items listed above.

1.The current assets section includes: cash $150,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned revenue $5,000.

2.The investments section includes: the cash surrender value of a life insurance contract $40,000; investments in common stock, short-term (trading) $80,000 and long-term (available-for-safe) $270,000; and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same -------no market adjustment account.

3.Property, plant, and equipment includes: buildings $ 1,040,000 less accumulated depreciation $360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000.

4.Intangible assets include: a franchise $165,000; goodwill $100,000; and discount on bonds payable $40,000.

5.Current liabilities include: accounts payable $140,000; notes payable------short-term $80, 000 and long-term $120,000; and taxes payable $40,000.

6.Long-term liabilities are composed solely of 7% bonds payable due 2030. In other words, the bond (debt) is to be re-paid by the year 2030 with a 7% interest rate.

7.Stockholders equity has: preferred stock, no par value, authorized 200,000 shares, issued 70,000 shares for $450,000; AND common stock, $1.00 par value, authorized 400,000 shares, issued 100,000 shares at an average price of $10. In other words, common stock was issued for an average price of $10 per share. In addition, the corporation has retained earnings of $320,000.