A fire occurred in a friendâ€™s restaurant overnight on December 31, 0007, and the friend has asked for your help. Although many accounting records were lost, some were recovered. With the recovered records and information obtained from outside sources, you believe a balance sheet can be reconstructed for the period ending on the date of the fire. Your friend provided the following information:
â– The forecasted current ratio as of December 31, 0007, was 1.25 to 1.
â– Balance sheets for the previous three years indicated that current assetson average represented 25% of total assets.
â– The bank reported the year-end bank balance was $976. It was estimatedthat $1,500 in the restaurantâ€™s safe was destroyed during the fire.
â– The bank also indicated that it is owed $23,000 on a long-term note,and the current amount due in Year 0007 is $3,444.
â– The value of ending inventories was $4,945.
â– Restaurant suppliers indicated that in total they were owed $3,420 at theclose of business on December 31, 0007.
â– All employees were paid up to and including the night of the fire.
Calculate the following:
a. Total current assets
b. Credit card receivables, assuming current assets consisted only of cash,credit card receivables, and inventories
c. Total assets
d. Prepare a balance sheet as of December 31, 0007, to give to your friend.