sheet on December 30, 2025, so that the CFO could get an idea of how the company stood. He knows that certain debt agreementswith its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows.Current assetsCashAccounts receivable :Prepaid insuranceEquipment (net)Total assetsCurrent liabilitiesAccounts payableFlounder CorporationBalance SheetDecember 30, 2025Liabilities and Stockholders' EquityCurrent liabilitiesAssetsStockholders' equityCommon stockCurrent ratio$22,500Accounts payableSalaries and wages payableLong-term liabilitiesNotes payableTotal liabilities29,0005,200Working capital $Current ratioLiabilities and Stockholders' Equity$18,000Retained earningsTotal liabilities and stockholders' equityWorking capital $$56,700180,000$236,700$18,000:19,00090,00047,700Calculate the current ratio and working capital based on the preliminary balance sheet. (Round current ratio to 1 decimal place, eg0.7:1)$ 27,00072,00099,000137,700$236,700Based on the results in above part, the CFO requested that $18,000 of cash be used to pay off the balance of the AccountsPayable account on December 31, 2025. Calculate the new current ratio and working capital after the company takes theseactions. (Round current ratio to 1 decimal place, e.g. 0.7:1.)

Current ratio is a liquid ratio that measures a company's ability to pay short term obligation or…

sheet on December 30, 2025, so that the CFO could get an idea of how the company stood. He knows that certain debt agreem with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows. Current assets Cash Accounts receivable Prepaid insurance Equipment (net) Total assets Flounder Corporation Balance Sheet December 30, 2025 Current liabilities Accounts payable Assets $22,500 Liabilities and Stockholders' Equity 29,000 5,200 Stockholders' equity $18,000 Current liabilities Accounts payable Salaries and wages payable Long-term liabilities Notes payable Total liabilities $56,700 180,000 Liabilities and Stockholders' Equity $236,700 $18,000 9,000 $ 27,000 72,000 99,000

sheet on December 30, 2025, so that the CFO could get an idea of how the company stood. He knows that certain debt agreem with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows. Current assets Cash Accounts receivable Prepaid insurance Equipment (net) Total assets Flounder Corporation Balance Sheet December 30, 2025 Current liabilities Accounts payable Assets $22,500 Liabilities and Stockholders' Equity 29,000 5,200 Stockholders' equity $18,000 Current liabilities Accounts payable Salaries and wages payable Long-term liabilities Notes payable Total liabilities $56,700 180,000 Liabilities and Stockholders' Equity $236,700 $18,000 9,000 $ 27,000 72,000 99,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 92PSA: A Preparation of Ratios Refer to the financial statements for Burch Industries in Problem 12-89A and...

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