Question
Calculate current ratio and debt ratio and answer the questions P3-65A. (Learning Objective 6: Analyze and evaluate liquidity and debt-paying ability) Bellwood Company's condensed and
Calculate current ratio and debt ratio and answer the questions
P3-65A. (Learning Objective 6: Analyze and evaluate liquidity and debt-paying ability) Bellwood Company's condensed and adapted balance sheet at December 31, 2018, follows: Tota I plnt, equi'mt, othu Total Total liabilities.__________________ Total Sgl_l s 9.4 sgl_l Assume that during the first quarter of the following year, 2019, Bellwood completed the following transactions: a. Earned revenue, $2.6 million, on account. Borrowed $5.0 million in long-term debt. c. Paid half of the current liabilities. d. Paid selling expense of SLO million. e. Accrued general exiwnse of SO. 7 million. Credit General Expense Payable, a current liability. f. Purchased equipment for $4.4 million, paying cash of .7 million, and signing a long-term note payable for S2.7 million. g. Recorded depreciation expense of $0.9 million. Requirements Calculate Bellwood 's current ratio and debt ratio at December 31, 2018. Round to two decimal places. Consider each transaction separately. Calculate Bellwood's current ratio and debt ratio after each transaction during 2019that is, seven times. Round ratios to two decimal places. Complete the following statements with either 'fincrease" or "decrease": a Revenues usually b. Revenues usually Expenses usually to this rule.) d. Expenses usually the current ratio. the debt ratio. the current ratio. (Note: Depreciation is an exception the debt ratio. e If a company's current ratio is greater than 1.0, as it is for Bellwood, paying Offa current liability will always the current ratio. f. Borrowing money on long-term debt will always the debt ratio. the current ratio and
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started