The bond indenture for the 10-year, 10% debenture bonds dated January 2, 2014, required working capital of

Question:

The bond indenture for the 10-year, 10% debenture bonds dated January 2, 2014, required working capital of $142,000, a current ratio of 1.7, and a quick ratio of 1.2 at the end of each calendar year until the bonds mature. At December 31, 2015, the three measures were computed as follows:

1. Current assets: Cash $170,000 Temporary investments Accounts and notes receivable (net) Inventories... Prepaid expens

a. List the errors in the determination of the three measures of liquidity analysis.
b. Is the company satisfying the terms of the bond indenture?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Volume 2

ISBN: 978-0176509743

2nd Canadian edition

Authors: James Reeve, Jonathan Duchac, Sheila Elworthy, Carl S. Warren

Question Posted: