Question
The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a
The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows: 1. Current assets: Cash $102,000 Temporary investments 48,000 Accounts and notes receivable (net) 120,000 Inventories 36,000 Prepaid expenses 24,000 Intangible assets 124,800 Property, plant, and equipment 55,200 Total current assets (net) $510,000 Current liabilities: Accounts and short-term notes payable $96,000 Accrued liabilities 204,000 Total current liabilities 300,000 Working capital $210,000 2. Current ratio 1.7 $510,000 $300,000 3. Quick ratio 1.2 $115,200 $96,000 a. Find the errors in the determination of the three measures of current position analysis. Then provide the correct amounts below. If required, round the ratios to one decimal place. Working capital $ Current ratio Quick ratio
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