Homework Answers
Answers
- Requirement [a] with examples and assumed figure.
|
Current Assets |
Current Liabilities |
Current Ratio |
|
|
Preliminary Trial Balance balance |
$140,000 |
$100,000 |
1.40 |
|
Payment of some of accounts payable |
($20,000) |
($20,000) |
|
|
New balances and ratio |
$120,000 |
$80,000 |
1.50 |
Hence, a payoff of AP would INCREASE the current ratio
- Requirement [b] with examples and assumed figure
|
Current Assets |
Current Liabilities |
Current Ratio |
|
|
Preliminary Trial Balance balance |
$90,000 |
$100,000 |
0.90 |
|
Payment of some of accounts payable |
($20,000) |
($20,000) |
|
|
New balances and ratio |
$70,000 |
$80,000 |
0.88 |
Hence, a payoff of AP would DECREASE the current ratio.
Add Answer to:
At the end of 2021, Barker Corporation's preliminary trial balance indicated a current ratio of 1.4....
At the end of 2021, Barker Corporation’s preliminary trial balance indicated a current ratio of 1.3....
At the end of 2021, Barker Corporation’s preliminary trial
balance indicated a current ratio of 1.3. Management is
contemplating paying some of its accounts payable balance before
the end of the fiscal year. Determine whether the effect this
transaction would increase or decrease the current ratio. Would
your answer be the same if the preliminary trial balance indicated
a current ratio of 0.8?
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transaction would increase or decrease the current ratio. Would
your answer be the same if the preliminary trial balance indicated
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Saved The unadjusted trial balance of the Manufacturing Equitable at December 31, 2021, the end of its fiscal year, included the following account balances. Manufacturing's 2021 financial statements were issued on April 1, 2022 Accounts receivable Accounts payable 12% notes, payable to bank Mortgage note payable $ 95,750 37,600 667,000 1,442,000 Other information: a. The bank notes, issued August 1, 2021, are due on July 31, 2022, and pay interest at a rate of 12%, payable at maturity b. The...
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