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1Digger Company

Accounting

1Digger Company. Digger's condensed and adapted balance sheet at December 31, 2015, follows: Total current assets. Properties, plant, equipment, and other assets. (In millions) $15.2 15.8 $31.0 $ 8.6 5.8 Total current liabilities. Total long-term liabilities. Total shareholders' equity 16.6 $31.0 Assume that during of the following year, 2016. Digger completed the following transactions: a. Earned revenue of $2.7 million, on account. b. Borrowed $7.0 million on long-term debt. c. Paid half of the current liabilities. d. Paid selling expense of $0.6 million. e. Accrued general expense of $0.7 million. Credit General Expense Payable, a current liability. f. Purchased equipment for $4.2 million, paying cash of $1.7 million and signing a long-term note payable for $2.5 million. g. Recorded depreciation expense of $0.3 million. Compute Digger's current ratio, net working capital and debt ratio at December 31, 2015. Make the adjusting entries for year 2016 transactions. Construct Income Statement. Retained Earning Statement and Balance Sheet at December 31, 2016 Compute Digger's current ratio, net working capital and debt ratio at December 31, 2016. Did the net working capital, current ratio and debt ratio improve or deteriorate during 2016? (Show your solution step by step) (70 Points)

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