Balance Sheet - The balance sheet accounts and amounts of the Baggett Company as of December 31, 2007 are shown in random order as follows:
|
Account
|
Debit (Credit)
|
Account
|
Debit (Credit)
|
|
Income taxes payable
|
$3,800
|
Premium on preferred stock
|
$7,900
|
|
Prepaid items
|
1,800
|
Allowance for doubtful accounts
|
1,600
|
|
Premium on common stock
|
9,300
|
Bonds payable (due 2017)
|
23,000
|
|
Land
|
12,200
|
Buildings
|
57,400
|
|
Notes payable (due 2010)
|
6,000
|
Sinking fund to retire bonds payable
|
5,000
|
|
Notes receivable (due 2009)
|
16,400
|
Advances from customers (long-term)
|
2,600
|
|
Accounts receivable
|
12,600
|
Cash
|
4,300
|
|
Premium on bonds payable
|
1,400
|
Accumulated depreciation: equipment
|
9,700
|
|
Account
|
Debit (Credit)
|
Account
|
Debit
(Credit)
|
|
Accounts payable
|
13,100
|
Retained earnings
|
18,300
|
|
Inventory
|
7,400
|
Preferred stock, $100 par
|
18,600
|
|
Accumulated depreciation: buildings
|
21,000
|
Wages payable
|
1,400
|
|
Patents (net)
|
4,600
|
Common stock, $10 par
|
12,700
|
|
Equipment
|
28,700
|
Required
1. Prepare a December 31, 2007 balance sheet for the Baggett Company.
2. Compute the debt ratio.