On December 31, Alberta supplies prepared an income statement and balance sheet before processing four adjusting...
On December 31, Alberta supplies prepared an income statement and balance sheet before processing four adjusting entries. The income statement showed net income of $40,000. The balance sheet showed total current assets $30,000, fixed assets 100,000; total liabilities $60,000; and owner’s capital $30,000.
Please calculate the following ratios:
1. Working Capital
2. Current Ratio
Homework Answers
Working Capital = Current Assets - Current Liabilities
Current Assets = $30,000
Total Assets = Current Assets + Fixed Assets = $30,000 + $100,000 = $130,000
Current liabilities = Total Assets - Total liabilities - Owner's capital
Current liabilities = $130,000 - $60,000 - $30,000 = $40,000
Working capital = $40,000 - $30,000 = $10,000
Working capital = $10,000
2) Current ratio = Current Assets / Current Liabilities
Current ratio = $30,000 / $40,000 = 0.75
Current ratio = 0.75
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On December 31, Alberta supplies prepared an income statement
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