Chapter 17, Problem E17.22E

To determine

Condensed Balance Sheet: Balance sheet is a part of financial statements prepared at the end of accounting period which reflects the financial position of a company. When the balance sheet is prepared just to present the highlights of company’s assets, liabilities and owners’ equity instead of the complete version then it is called condensed balance sheet.

Debt Ratio: It is the ratio between total assets of the company and the total liabilities. Debt ratio reflects the finance strategy of the company. It is used to evaluate corporation’s ability to pay its debts. Higher debt ratio implies the higher financial risk.

Current Ratio: A part of liquidity ratios, current ratio depicts the ability to oblige the short period debts of a company. It is computed based on the current assets and current liabilities; a company has in an accounting period. Current ratio is useful tool for analysis of financials of a company.

To Prepare: Company B’s condensed balance sheet as of December 31, 2018.