Textbook Problem

Based on the information in RE4-2 and RE4-3, calculate Dorothy Corporation’s working capital and current ratio.

RE4-3. Dorothy Corporation had the following accounts in its year-end adjusted trial balance: Accounts Payable. $7,200; Salaries Payable, $5,800; Income Taxes Payable, $4,000; Short-Term Notes Payable, $2,500; Dividends Payable, $750; Investment in Held-to-Maturity Bonds, $2,750; and Allowance for Doubtful Accounts, $1,100. Prepare the current liabilities section of Dorothy’s balance sheet.

RE4-2. Dorothy Corporation had the following accounts in its year-end adjusted trial balance: Inventories, $23,600; Accounts Receivable, $7,600; Accounts Payable, $7,200; Prepaid Rent, $2,400; Marketable Securities, $3,000; Allowance for Doubtful Accounts, $1,100; and Cash, $1,500. Prepare the current assets section of Dorothy’s year-end balance sheet.