Refer to M2-23. Evaluate whether the current ratio of Robust Ribs Restaurant will increase or decrease as
Question:
Refer to M2-23. Evaluate whether the current ratio of Robust Ribs Restaurant will increase or decrease as a result of the following transactions.
In M2-23
The balance sheet of Robust Ribs Restaurant reports current assets of $30,000 and current liabilities of $15,000. Calculate and interpret the current ratio. Does it appear likely that Robust Ribs will be able to pay its current liabilities as they come due in the next year?
a. Paid $2,000 cash for a new oven.
b. Borrowed $5,000 cash from a bank, issuing a note that must be repaid in three years.
c. Received a $2,000 cash contribution from the company's main shareholder.
d. Purchased $500 of napkins, paper cups, and other disposable supplies on account.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Fundamentals of Financial Accounting
ISBN: 978-1259103292
4th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh