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QUESTION 7 Scrubber, Inc. presented the following information in a note to its financial statements for the year ending December 31, 2017: The company has
QUESTION 7 Scrubber, Inc. presented the following information in a note to its financial statements for the year ending December 31, 2017: The company has a loan agreement with Mountain State Bank that states: 1. The current ratio should remain at least 2.0 to 1 at all times. 2. The debt-to-equity ratio should not exceed 0.7 to 1 afany time. 3. The company must maintain $75,000 cash at all times. The ratios at year-end are current ratio, 2.3 to 1 and debt-to-equity ratio, 0.2 to 1. The amount of cash on the bank statement is $75,400, but the Cash account after the adjustments from the bank reconciliation has a balance of $74,900. Has Scrubber violated its loan agreement? O a. Yes, the cash balance is less than $75,000, and the debt-to-equity ratio is overstated. O b. No O. Yes, the current ratio is 0.3 or 30% larger than the agreement indicates, Od. Yes, the cash balance is less than $75,000
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