Question

Using the information below, calculate the:
a. Working capital
b. Current ratio
Round calculations to two decimal places.
Accounts payable......................................................... $10,000
Accounts receivable..................................................... 15,000
Buildings...................................................................... 42,000
Cash ............................................................................ 4,000
Current portion of notes payable ................................. 7,000
Long-term notes payable ........................................... $20,000
Office supplies........................................................... 3,800
Prepaid insurance ...................................................... 2,500
Unearned fees........................................................... 1,000
Wages payable .......................................................... 3,000

c. What is the difference between working capital and the current ratio?
d. Assuming this company’s current ratio was 1.12:1 in the last accounting period, does the result of the calculation in part (b) above represent a favourable or unfavorable change?



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  • CreatedJanuary 08, 2015
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