On May 1, 2020, Fresh Fashions borrowed $103,000 at a bank by signing a four-year, 6% loan. The terms of the loan require equal principal payments of $25,750 and accrued interest at 6% due annually on April 30. The loan agreement requires the company to maintain a minimum current ratio of 2.0. The December 31, 2020, year-end statement of financial position, immediately prior to the reclassification of long-term debt, follows:

Current assets		$132,000		Current liabilities		$55,000
Non-current assets		163,000		Loan payable		103,000
				Common shares		67,000
				Retained earnings		70,000
Total assets		$295,000		Total liabilities and shareholders equity		$295,000

A)

B)

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 O for the amounts.) Account Titles and Explanation Debit Credit Long-Term Loan Payable 17,167 Current Portion of Long-Term Debt 17,167 Does Christina Fashions breach the bank's current ratio requirement after preparing the journal entries above? (Round answer to 2 decimal places, e.g. 1.25.) Current ratio 1.83