The bond indenture for the 10-year, 10% debenture bonds dated January 2, 2009, required working capital of
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The bond indenture for the 10-year, 10% debenture bonds dated January 2, 2009, required working capital of $142,000, a current ratio of 1.7, and a quick ratio of 1.2 at the end of each calendar year until the bonds mature. At December 31, 2010, the three measures were computed as follows:
a. List the errors in the determination of the three measures of current position analysis.b. Is the company satisfying the terms of the bondindenture?
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1. Current assets: Cash $170,000 Temporary investments Accounts and notes receivable (net) Inventories 80,000 200,000 60,000 Prepaid expenses Intangible assets Property, plant and equipment Total current assets (net) 40,000 208,000 92,000 S850,000 Current liabilities: Accounts and short-term notes payable Accrued liabilities $160,000 340,000 Total current liabilities 500,000 Working capital $350,000 2. Current ratio 1.7 ১৪50,000 + $500,000 3. Quick ratio 1.2 $192,000 + $160,000
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a The working capital current ratio and quick ratio are calculated incorrectly The working capital a...View the full answer
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Saud Ur Rehman
Evaluating manufacturing processes by designing and conducting research programs; applying knowledge of product design, fabrication, assembly, tooling, and materials; conferring with equipment vendors; soliciting observations from operators. Developing manufacturing processes by studying product requirements; researching, designing, modifying, and testing manufacturing methods and equipment; conferring with equipment vendors. Keeping equipment operational by coordinating maintenance and repair services; following manufacturer's instructions and established procedures; requesting special service.
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