P4-29A Selected accounts of Blume Irrigation System at December 31, 2012, follow:

Price: $3.99

P4-29A Preparing a classified balance sheet in report form, and using the

current and debt ratios to evaluate a company [30-40 min]

Selected accounts of Blume Irrigation System at December 31, 2012, follow:

Insurance expense	$900		Accounts payable	$24,700
Note payable, long-term	2,800		Accounts receivable	43,100
Other assets	2,200		Accumulated depreciation—building	24,000
Building	55,800		Blume, capital, December 31, 2011	52,000
Prepaid insurance	4,000		Accumulated depreciation—equipment	7,900
Salary expense	16,300		Cash	11,000
Salary payable	3,900		Interest payable	400
Service revenue	74,800		Blume, drawing	2,000
Supplies	3,300		Equipment	23,000
Unearned service revenue	1,600		Depreciation expense	30,500

Requirements

1. Prepare the company’s classified balance sheet in report form at December 31, 2012.

2. Compute the company’s current ratio and debt ratio at December 31, 2012. At

December 31, 2011, the current ratio was 1.81 and the debt ratio was 0.34.

Did the company’s ability to pay debts improve or deteriorate, or did it remain

the same during 2012?