On June 30, 2020, Kovacs Company borrowed $390,000 at a bank by signing a five-year, 10% loan. The terms of the loan require equal semi-annual principal payments plus interest beginning December 31, 2020. The loan agreement requires the company to maintain a current ratio of 2.5. The December 31, 2020, year-end statement of financial position, immediately prior to the bank loan repayment and the reclassification of long-term debt, follows: Current assets Non-current assets $184,500 519,500 Current liabilities Loan payable Common shares Retained earnings Total liabilities and shareholders' equity $45,000 390,000 164,000 105,000 Total assets $704,000 $704,000 Prepare journal entries to record the principal and interest payment on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Interest Expense 195000 Interest Payable 19500 Cash 214500 Your answer is partially correct. Prepare the journal entries to reclassify the portion of the long-term loan as current. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Long-Term Loan Payable 390000 Cash 390000 - Your answer is partially correct. Does Kovacs Company comply with the current ratio requirement after preparing the journal entries above? (Round answer to 2 decimal places, e.g. 1.25.) 2.21 Current ratio Kovacs Company does not meet the bank's minimum current ratio