These financial statement items are for Fairview Corporation at year-end, July 31, 2022.
Salaries and wages payable $ 2080
Salaries and wages expense 57,500
Supplies Expense 15,600
Equipment 18,500
Accounts payable 4,100
Service Revenue 66, 100
Rent expense 8,500
Notes payable(due in 2025) 1,800
Common Stock 16,000
Cash 29,200
Accounts Receivable 9,780
Accumulated depreciation-equipment 6,000
Dividends 4,000
Depreciation expense 4,000
Retained earnings (beginning of the year) 34,000
a. Prepare an income statement and a retained earnings statemeny for the year. Fairview Corporation did not issue any new stock during the year.
b. Prepare a classified balance sheet at July 31.
c, Compute the current ratio and debt to assets ratio
d. Suppose that you are president of Lunar Equipment. Your sales manager has approached you with a proposal to sell $ 20,000 of equipment to Fairview. He would like to provide a loan to Fairview in the form of a 10%, 5-year note payable. Evaluate how this loan would charge Fairview's current ratio, and discuss whether you would make the sale.
