Your client, Harper Company, has a contractual commitment as a part of a bond indenture to maintain a current ratio of 2 0 If the ratio falls below that level on the balance sheet date, the entire bond becomes payable immediately In the current year, the client 's financial statements show that the ratio has dropped from 2 6 to 2 05 over the past year How should this situation affect your audit plan

Question: Your client, Harper Company, has a contractual commitment as a part of a bond indenture to maintain a current ratio of 2.0. If the ratio

Your client, Harper Company, has a contractual commitment as a part of a bond indenture to maintain a current ratio of 2.0. If the ratio falls below that level on the date, the entire bond becomes payable immediately. In the current year, the client's show that the ratio has dropped from 2.6 to 2.05 over the past year. How should this situation affect your audit plan?

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