A. The chief financial officer (CFO) of Crane Corporation requested that the accounting department prepare a preliminary

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A. The chief financial officer (CFO) of Crane Corporation requested that the accounting department prepare a preliminary statement of financial position on December 20, 2018. He knows that certain debt agreements with its lenders require the company to maintain a current ratio of at least 2:1 and wants to know how the company is doing. The preliminary statement of financial position follows:

CRANE CORPORATION Statement of Financial Position December 20, 2018
Assets		Liabilities
Current assets		Current liabilities
Cash	$22,000	Accounts payable	$20,000
Accounts receivable	31,000	Salaries payable	20,000	$40,000
Prepaid insurance	5,000	Non-current liabilities
Total current assets	58,000	Bank loan payable		70,000
Equipment	250,000	Total liabilities		110,000
Total assets	$308,000	Shareholders’ equity
		Common shares	$90,000
		Retained earnings	108,000	198,000
		Total liabilities and shareholders’ equity		$308,000

Calculate the current ratio based on the data in the preliminary statement of the financial position. (Round current ratio to 1 decimal place, e.g. 5.2)
Current ratio ______: 1

Based on the results in (a), the CFO requested that $21,300 of the cash be used to pay off the balance of the accounts payable account on December 21. Calculate the current ratio after this payment is made, assuming there are no further changes to current assets and current liabilities. (Round current ratio to 1 decimal place, e.g. 5.2)

Current ratio ______: 1

B. The chief financial officer (CFO) of Whispering Winds Corporation requested that the accounting department prepare a preliminary statement of financial position on December 30, 2018, so that the CFO could get an idea of how the company stood. He knows that certain debt agreements with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary statement of the financial position is as follows.

WHISPERING WINDS CORP. Statement of Financial Position December 30, 2018
Assets			Liabilities and Shareholders’ Equity
Current assets			Current liabilities
Cash	$30,400		Accounts payable	$26,000
Accounts receivable	30,400		Salaries payable	15,800	$41,800
Prepaid insurance	10,260	$71,060	Non-current liabilities
Property, plant, and equipment (net)		196,940	Bank loan payable		85,800
Total assets		$268,000	Total liabilities		127,600
			Shareholders’ equity
			Common shares	100,100
			Retained earnings	40,300	140,400
			Total liabilities and shareholders’ equity		$268,000

Calculate the current ratio and working capital based on the preliminary statement of financial position at December 30, 2018. (Round current ratio to 1 decimal place, e.g. 2.1.)

Current ratio		______	: 1
Working capital		$

Based on the results in (a), the CFO requested that $25,800 of cash be used to pay some of the balance of the accounts payable account on December 31, 2018. Calculate the new current ratio and working capital after the company takes these actions. (Round current ratio to 1 decimal place, e.g. 2.1.)