R. Kudemus Co. and R. Ballgala Co. were competitors and both engaged in buying and selling of almost the same products. Their Balance Sheet after a year of operation were hereunder presented: Current Assets: Cash In Bank Accounts Receivable Merchandise Inventory Prepaid Expenses Current Liabilities: Accounts Payable Accrued Expense Notes Payable (Current) Both were bank loan applicants. Required: R. Kudemus Co. P105,000 80,000 120,000 15,000 35,000 15,000 R. Baligala Co. P100,000 60,000 70,000 4,000 30,000 10,000 1) Determine the working capital of each company. 2) Which of the two (2) companies has a better position of paying their financial obligations when it matures? Compute and interpret their respective "banker's ratio". 3) Which of the two (2) companies was more liquid in terms of paying debts right away. Compute and interpret their respective "acid-test ratio".

R. Kudemus Co. and R. Ballgala Co. were competitors and both engaged in buying and selling of almost the same products. Their Balance Sheet after a year of operation were hereunder presented: Current Assets: Cash In Bank Accounts Receivable Merchandise Inventory Prepaid Expenses Current Liabilities: Accounts Payable Accrued Expense Notes Payable (Current) Both were bank loan applicants. Required: R. Kudemus Co. P105,000 80,000 120,000 15,000 35,000 15,000 R. Baligala Co. P100,000 60,000 70,000 4,000 30,000 10,000 1) Determine the working capital of each company. 2) Which of the two (2) companies has a better position of paying their financial obligations when it matures? Compute and interpret their respective "banker's ratio". 3) Which of the two (2) companies was more liquid in terms of paying debts right away. Compute and interpret their respective "acid-test ratio".

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter4: The Adjustment Process

Section: Chapter Questions

Problem 2PB: To demonstrate the difference between cash account activity and accrual basis profits (net income),...

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