The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows:

a. List the errors in the determination of the three measures of current position analysis.

b. Is the company satisfying the terms of the bond indenture? Explain.

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1. Current assets: Cash. Temporary investments Accounts and notes receivable (net. Merchandise inventory.... .... $102,000 48,000 ** 120,000 36,000 Prepaid expenses.. Intangible assets. Property, plant, and equipment. Total current assets (net). Current liabilities: 24,000 124,800 55,200 $510,000 ..... Accounts and short-term notes payable. Accrued liabilities. Total current liabilities. . $ 96,000 204,000 300.000 $210,000 ..... Working capital.. .......