Longwood Company Had a Current Ratio of 3:1 at the End

Longwood Company had a current ratio of 3:1 at the end of Year 1.The asset section of the company's balance sheet is provided below: $\begin{array}{|l|r|r|}\hline \text { Cash } && \$ 100,000 \\\hline \text {Accounts receivable } &\$ 400,000 \\\hline \text { Less allowance for uncollectible Accounts } &\underline { 50,000} & 350,000 \\\hline \text { Inventory } && 550,000 \\\hline \text {Prepaid expenses} && 74,000 \\\hline \text {Property, plant, \& equipment, net } && \underline { 926,000} \\\hline \text {Total assets} &&\underline { \$ 2,000,000 }\\\hline\\\hline\end{array}$ Required:
1)Compute Longwood Company's end-of-year working capital.
2)Compute the company's quick (acid-test)ratio.
3)The company has a debt agreement with its bank that authorizes the bank to call in its loan to the company if the company's current ratio falls below 3:1 as of the last day of any month during the term of the loan.During January Year 2,the company engaged in the three following transactions:
(a)Collected $100,000 on account;
(b)Purchased inventory on account,$50,000
(c)Paid accounts payable,$60,000
Will the company be in default after completing these transactions? Justify your answer.
Round your answers to two decimal places.