$$\begin{array} { l r l r }
\text { Retained earnings } & \$ 370,000 & \text { Notes payable (due in 6 years) } & \text { \$120,000 } \
\text { Accumulated depreciation } & 130,000 & \text { Salaries payable } & 10,000 \
\text { Income taxes payable } & 240,000 & \text { Supplies } & 20,000 \
\text { Plant } & 480,000 & \text { Accounts payable } & 360,000 \
\text { Cash } & 110,000 & \text { Inventory } & 330,000 \
\text { Accounts receivable } & 350,000 & \text { Land } & 500,000 \
\text { Common shares } & 600,000 & \text { Prepaid insurance } & 40,000
\end{array}$$
-Refer to Baloon-E-Tunes.Calculate the amount of working capital at December 31.What can you learn from the current ratio that you cannot learn from the amount of working capital?

Question

$$\begin{array} { l r l r } 
\text { Retained earnings } & \$ 370,000 & \text { Notes payable (due in 6 years) } & \text { \$120,000 } \
\text { Accumulated depreciation } & 130,000 & \text { Salaries payable } & 10,000 \
\text { Income taxes payable } & 240,000 & \text { Supplies } & 20,000 \
\text { Plant } & 480,000 & \text { Accounts payable } & 360,000 \
\text { Cash } & 110,000 & \text { Inventory } & 330,000 \
\text { Accounts receivable } & 350,000 & \text { Land } & 500,000 \
\text { Common shares } & 600,000 & \text { Prepaid insurance } & 40,000
\end{array}$$
-Refer to Baloon-E-Tunes.Calculate the amount of working capital at December 31.What can you learn from the current ratio that you cannot learn from the amount of working capital?

Quizplus · Accepted Answer

The Answer of $$\begin{array} { l r l r } 
\text { Retained earnings } & \$ 370,000 & \text { Notes payable (due in 6 years) } & \text { \$120,000 } \
\text { Accumulated depreciation } & 130,000 & \text { Salaries payable } & 10,000 \
\text { Income taxes payable } & 240,000 & \text { Supplies } & 20,000 \
\text { Plant } & 480,000 & \text { Accounts payable } & 360,000 \
\text { Cash } & 110,000 & \text { Inventory } & 330,000 \
\text { Accounts receivable } & 350,000 & \text { Land } & 500,000 \
\text { Common shares } & 600,000 & \text { Prepaid insurance } & 40,000
\end{array}$$
-Refer to Baloon-E-Tunes.Calculate the amount of working capital at December 31.What can you learn from the current ratio that you cannot learn from the amount of working capital?