To be in good standing the bank requires the company you're auditing to maintain a 2:1...

 

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To be in "good standing the bank requires the company you're auditing to maintain a 2:1 current ratio or better. Below is a partial balance sheet from which the company calculated the current ratio. 2,500,000 Current assets Current liabilities: accounts payable salary and wages payable notes payable Total current liabilities Long term liabilities: mortgage payable lease payable Total long-term debt 750,000 100,000 300.000 6,860,000 3.379.000 1,150,000 10,239,000 The company makes $9,600 monthly principle payments on the mortgage and $4,300 monthly principle payments on the lease. The payments will continue into the foreseeable future. is the company in compliance with the banks' debt covenant? 27 To be in "good standing the bank requires the company you're auditing to maintain a 2:1 current ratio or better. Below is a partial balance sheet from which the company calculated the current ratio. 2,500,000 Current assets Current liabilities: accounts payable salary and wages payable notes payable Total current liabilities Long term liabilities: mortgage payable lease payable Total long-term debt 750,000 100,000 300.000 6,860,000 3.379.000 1,150,000 10,239,000 The company makes $9,600 monthly principle payments on the mortgage and $4,300 monthly principle payments on the lease. The payments will continue into the foreseeable future. is the company in compliance with the banks' debt covenant? 27

Answer rating: 100% (QA)

To determine if the company is in compliance with the banks debt covenant of maintaining a 21 current ratio or better we need to calculate the current ... View the full answer