Question

HYDRO COMPANY Balance Sheet December 31, 2015 Cash $40,000 Current liabilities $80,000 Accounts receivable (net) 80,000...

HYDRO COMPANY
Balance Sheet
December 31, 2015
Cash $40,000 Current liabilities $80,000
Accounts receivable (net) 80,000 10% Bonds payable 120,000
Inventory 130,000 Common Stock 200,000
Plant and equipment (net) 250,000 Retained earnings 100,000
Total assets $500,000 Total Liabilities and Stockholders' Equity $500,000


Sales revenues for 2015 were $800,000, gross profit was $320,000, and net income was $36,000. The income tax rate was 40 percent. One year ago, accounts receivable (net) were $76,000, inventory was $110,000, total assets were $460,000, and stockholders’ equity was $260,000. The bonds payable were outstanding all year and the 2015 interest expense was $12,000.

The current ratio of Hydro Company at 12/31/2015, calculated using the above data, was 3.13 and the company’s working capital was $170,000. Which of the following would happen if the firm paid off $20,000 of its current liabilities on January 1, 2016?

Select one:

Both the current ratio and working capital would decrease.

The current ratio would increase, but working capital would remain the same.

Both the current ratio and working capital would increase.

The current ratio would increase, but working capital would decrease.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Current assets = Cash + Accounts receivable + Inventory

= 40,000 + 80,000 + 130,000

= 250,000

Current liablities = 80,000

Current assets after 20,000 payment is made for current liabilities = 250,000 - 20,000 = 230,000

Current liabilities after 20,000 payment is made for current liabilities = 80,000 - 20,000 = 60,000

Current ratio = Current assets / Current liabilities = 230,000 / 60,000 = 3.83

Working capital = Current assets - Current liabilities = 230,000 - 60,000 = 170,000

The answer is - The current ratio would increase, but working capital would remain the same.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Hydro Company Balance Sheet December 31, 2020 Cash $ 40,000 Current Liabilities $ 80,000 Accounts Rec....
Hydro Company Balance Sheet December 31, 2020 Cash $ 40,000 Current Liabilities $ 80,000 Accounts Rec. (net) 80,000 10% Bonds payable 120,000 Inventory 130,000 Common Stock 200,000 Plant & Equip. (net) 250,000 Retained earnings 100,000 Total Assets $500,000 Total Liab. and S/H/E $500,000 Sales revenues for 2020 were $800,000, gross profit was $320,000, and net income was $36,000. The income tax rate was 40 percent. One year ago, accounts receivable (net) were $76,000, inventory was $110,000, total assets were $460,000,...
Biwott Company Balance Sheet As of December 31, 2021 Assets Cash $  60,000 Accounts Receivable   60,000 Marketable...
Biwott Company Balance Sheet As of December 31, 2021 Assets Cash $  60,000 Accounts Receivable   60,000 Marketable Securities   80,000 Land   20,000 Equipment (net) 160,000 Total $ 380,000 Liabilities and Stockholders' Eqiuity Accounts Payable $  30,000 Taxes Pay. in 10 days   20,000 Bonds Pay. in 4 yrs.   80,000 Common Stock 125,000 Retained Earnings 125,000 Total $ 380,000 What amount of quick assets did Biwott Company hold at December 31, 2021? a. $120,000 b. $140,000 c. $200,000 d. $220,000 Cook Corporation Balance Sheet As...
Balance sheet December 31 Assets 2007 2006 Cash $25,000 $40,000 Short term investments 15,000 60,000 Accounts...
Balance sheet December 31 Assets 2007 2006 Cash $25,000 $40,000 Short term investments 15,000 60,000 Accounts receivable 50,000 30,000 Inventory 50,000 70,000 Property, plant and equipment (net) 160,000 200,000 Total assets $300,000 $400,000 Liabilities and stockholders equity    Accounts payable $20,000 $30,000 Short term notes payable 40,000 90,000 Bonds payable 80,000 160,000 Common stock 60,000 45,000 Retained earnings 100,000 75,000 Total liabilities and stockholders equity $300,000 $400,000 Income statement (for the year ended December 31, 2007) Net sales $360,000 Cost...
CCC - Balance sheets 31 December 2018, 2017 assets 2018 2017 Fixed assets, net 600,000 500,000...
CCC - Balance sheets 31 December 2018, 2017 assets 2018 2017 Fixed assets, net 600,000 500,000 Inventory 70,000 50,000 Accounts receivable, net 100,000 150,000 Cash 30,000 50,000 Total current assets € 200,000 € 250,000 Total assets € 800,000 € 750,000 Equity and liabilities 2018 2017 Share capital 300,000 200,000 Retained earnings 80,000 100,000 Total equity € 380,000 € 300,000 Payable bonds 200,000 250,000 Accounts payable 150,000 120,000 Income taxes payable 70,000 80,000 Total current liabilities € 220,000 € 200,000 Total...
Balance sheet December 31 Assets 2007 2006 Cash $25,000 $40,000 Short term investments 15,000 60,000 Accounts...
Balance sheet December 31 Assets 2007 2006 Cash $25,000 $40,000 Short term investments 15,000 60,000 Accounts receivable 50,000 30,000 Inventory 50,000 70,000 Property, plant and equipment (net) 160,000 200,000 Total assets $300,000 $400,000 Liabilities and stockholders equity    Accounts payable $20,000 $30,000 Short term notes payable 40,000 90,000 Bonds payable 80,000 160,000 Common stock 60,000 45,000 Retained earnings 100,000 75,000 Total liabilities and stockholders equity $300,000 $400,000 Income statement (for the year ended December 31, 2007) Net sales $360,000 Cost...
Luther Corporation Consolidated Balance Sheet December 31, 2016 and 2015 (in $ millions) Assets 2016 2015...
Luther Corporation Consolidated Balance Sheet December 31, 2016 and 2015 (in $ millions) Assets 2016 2015 Liabilities and Stockholders' Equity 2016 2015 Current Assets Current Liabilities Cash 63.6 58.5 Accounts payable 87.6 73.5 Accounts receivable 55.5 39.6 Notes payable/ short-term debt 10.5 9.6 Inventories 45.9 42.9 Current maturities of long-term debt 39.9 36.9 Other current assets 6.0 3.0 Other current liabilities 6.0 12.0 Total current assets 171.0 144.0 Total current liabilities 144.0 132.0 Long-Term Assets Long-Term Liabilities Land 66.6 62.1...
Financial statements for AAR Company appear below: AAR Company Balance Sheet December 31 Current assets:    ...
Financial statements for AAR Company appear below: AAR Company Balance Sheet December 31 Current assets:     Cash and marketable securities $21,000     Accounts receivable, net 160,000     Inventory 300,000     Prepaid expenses          9,000       Total current assets 490,000 Noncurrent assets:     Plant & equipment, net      810,000 Total assets $1,300,000 Current liabilities:     Accounts payable $75,000     Accrued liabilities 25,000     Notes payable, short term      100,000        Total current liabilities 200,000 Noncurrent liabilities:     Bonds payable      300,000...
The financial statements of Elcamino Company appear below: ELCAMINO COMPANY Comparative Balance Sheet December 31, ________________________________________________________...
The financial statements of Elcamino Company appear below: ELCAMINO COMPANY Comparative Balance Sheet December 31, ________________________________________________________ Assets                                                                                                        2017 2016    Cash ..................................................................................................    $ 25,000................................................................................................ $ 40,000 Debt investments ..............................................................................       20,000 60,000 Accounts receivable (net) .................................................................       50,000 30,000 Inventory ...........................................................................................       140,000 170,000 Property, plant and equipment (net) .................................................        170,000.............................................................................................. 200,000       Total assets ................................................................................       $405,000 $500,000 Liabilities and stockholders' equity Accounts payable .............................................................................    $ 25,000................................................................................................ $ 30,000 Short-term notes payable .................................................................       40,000...
Hopewell Corporation Balance Sheet As of December 31, 2019 (amounts in thousands) Cash 125,000 Accounts Payable...
Hopewell Corporation Balance Sheet As of December 31, 2019 (amounts in thousands) Cash 125,000 Accounts Payable 24,000 Accounts Receivable 36,000 Debt 37,000 Inventory 52,000 Other Liabilities 30,000 Property Plant & Equipment, Gross 226,000 Total Liabilities 91,000 Accumulated Depreciation 59,000 Paid-In Capital 56,000 Property Plant & Equipment, Net 167,000 Retained Earnings 239,000 Other Assets 6,000 Total Equity 295,000 Total Assets 386,000 Total Liabilities & Equity 386,000 Hopewell Corporation Statement of Cash Flows January 1 to March 31, 2020 (amounts in thousands)...
For December 31, 20X1, the balance sheet of Baxter Corporation was as follows:    Current Assets...
For December 31, 20X1, the balance sheet of Baxter Corporation was as follows:    Current Assets Liabilities Cash $ 27,000 Accounts payable $ 29,000 Accounts receivable 32,000 Notes payable 37,000 Inventory 42,000 Bonds payable 67,000 Prepaid expenses 13,700 Fixed Assets Stockholders’ Equity Gross plant and equipment $ 267,000 Preferred stock $ 37,000 Less: Accumulated depreciation 53,400 Common stock 72,000 Paid in Capital 42,000 Net plant and equipment $ 213,600 Retained earnings 44,300 Total assets $ 328,300 Total liabilities and stockholders’...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT