Part A (5 MARKS)

Define current assets without using the word "asset" and provide three examples.

Part B (5 MARKS)

Define liability without using the word "liability" and provide three examples. (5 marks)

Part C (5 MARKS)

A company reported current assets of $40,000 and current liabilities of $80,000, therefore, the: (a) Amount of working capital was $_____________________. (b) Working capital ratio was $_________________________.

Part D (10 MARKS)

The following transactions were completed by a corporation: (a) At the beginning of the year issued $25,000, 10 percent bonds payable (interest payable annually), due in 10 years, for $24,000 cash. Any bond premium or discount will be amortized on the straight-line basis. Give the entry to record the first interest payment. (b) Issued 3,500 shares of its common shares and received cash, $17,500, which was credited in full to the common shares subscribed account. Give the required correcting entry: (c) The working capital ratio for the company at the end of year one was 1.5 and the current assets, $156,750. Therefore, the current liabilities amounted to $______________________.