Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Part 1 Delamy Design Ltd. is a clothing designer, marketer, and distributor. The company reported the following in recent balances in the accounting records (the
Part 1 Delamy Design Ltd. is a clothing designer, marketer, and distributor. The company reported the following in recent balances in the accounting records (the accounts are all listed in alphabetical order as the bookkeeper thought that was what they were supposed to do): Accounts payable Accounts receivable Cash Common shares Income taxes payable Inventory Long-term debt Other current assets Other current liabilities Property, plant & equipment (net) Retained earnings (ending balance) Sep 30, 2020 $ 18,694 58,270 92,962 100,000 0 20,440 312 5,002 10,633 25,820 72,855 Dec 31, 2019 $ 19,207 81,336 73,324 100,000 3,512 25,816 1,709 5,512 12,880 54,128 102,808 Requirements: 1. Prepare a classified comparative balance sheet for Delamy Design for September 30, 2020 and December 31, 2019. 2. Research the accounting concepts of working capital and current ratio. Provide a definition for and formula for each. (a) Calculate the working capital at September 30, 2020, and December 31, 2019. (b) Calculate the current ratio at September 30, 2020, and December 31, 2019. 3. Did the company's current ratio increase or decrease? What does this imply about the company's ability to pay its current liabilities as they come due? 4. What would Delamy's current ratio have been if, on September 30, 2020, the company would have paid down $10,000 of its Accounts Payable? Does paying down Accounts Payable in this case increase or decrease the current ratio? Is Delamy's financial position the same, stronger, or weaker after paying down the Accounts Payable by $10,000. 5. Are the company's total assets financed primarily by liabilities or shareholders' equity at September 30, 2020
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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