The bond indenture for the 10-year, 8% debenture bonds dated January 2, 2011, required working capital of $200,000, a current ratio of 2.0, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 2012, 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 Temporary investments Accounts and notes receivable (net) Inventories Prepaid expenses Intangible assets Property, plant, and equipment 120,000 150,000 240,000 190,000 50,000 30,000 540,000 Total current assets (net) 1,320,000 Current liabilities: Accounts and short-term notes payable Accrued liabilities $440,000 160,000 Total current liabilities 600,000 720,000 Working capital 2. Current ratio 3. Quick ratio $1,320,000÷$600,000 $660,000 $440,000 2.2 1.5