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1. The chief financial officer (CFO) of Carla Vista Corporation requested that the accounting department prepare a preliminary balance sheet on December 30, 2022, so

1. The chief financial officer (CFO) of Carla Vista Corporation requested that the accounting department prepare a preliminary balance sheet on December 30, 2022, so that the CFO could get an idea of how the company stood. He knows that certain debt agreements with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows.

Carla Vista Corp. Balance Sheet December 30, 2022

Current assets

Current liabilities

Cash

$27,000

Accounts payable

$20,760

Accounts receivable

31,800

Salaries and wages payable

11,800 $32,560

Prepaid insurance

6,800 $65,600

Long-term liabilities

Equipment (net)

200,060

Notes payable

81,800

Total assets

$265,660

Total liabilities

114,360

Stockholders equity

Common stock

100,000

Retained earnings

51,300 151,300

Total liabilities and stockholders equity

$265,660

a. Calculate the current ratio and working capital based on the preliminary balance sheet. (Round current ratio to 2 decimal places, e.g. 0.50 : 1.)

b. Based on the results above, the CFO requested that $20,760 of cash be used to pay off the balance of the Accounts Payable account on December 31, 2022. Calculate the new current ratio and working capital after the company takes these actions. (Round current ratio to 2 decimal places, e.g. 0.50 : 1.)

Current ratio

enter current ratio rounded to 2 decimal places :1

Working capital

$enter working capital in dollars

2. Comparative financial statement data for Blossom Corporation and Pina Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2022.

Blossom Corporation Pina Corporation

2022

2022

Net sales

$2,232,000 $768,800

Cost of goods sold

1,457,000 421,600

Operating expenses

350,920 121,520

Interest expense

11,160 4,712

Income tax expense

105,400 44,640

Current assets

460,561 192,317

Plant assets (net)

659,680 173,263

Current liabilities

82,243 41,808

Long-term liabilities

134,540 50,448

(a)

Compute working capital and the current ratios for each company for 2022. (Round current ratio to 1 decimal place, e.g. 0.7 : 1.)

Working Capital

Current Ratio

Blossom Corporation

$enter working capital in dollars enter current ratio rounded to 1 decimal place :1

Pina Corporation

$enter working capital in dollars enter current ratio rounded to 1 decimal place :1

3. Listed below are assets and liabilities of Oriole Corporation for the years 2021 and 2022. Each is listed in alphabetical order.

Assets

2022

2021

Liabilities

2022

2021

Accounts receivable

$2,200 $2,900

Accounts payable

$4,400 $3,500

Cash

1,400 1,728

Bonds payable

31,500 26,500

Equipment (net)

46,500 52,500

Notes payable (current)

2,700 2,100

Inventory

4,200 4,700

Notes payable (long-term)

5,500 4,500

Land

24,500 24,500

Supplies

933 1,200

Total assets

$79,733 $87,528

Total liabilities

$44,100 $36,600

Oriole reported net income of $50,500 for 2022 and $44,500 for 2021.

a. Compute total current assets and total current liabilities for each year.

b. Compute working capital and the current ratio for each year. (Round current ratio to 2 decimal places, e.g. 52.75.)

2022

2021

Working capital

$enter working capital in dollars $enter working capital in dollars

Current ratio

enter current ratio rounded to 2 decimal places : 1 enter current ratio rounded to 2 decimal places : 1

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