Current Liabilities and Ratios
Several accounts that appeared on Spring's 2017 balance sheet are as follows:
Accounts Payable | $83,000 | Equipment | $950,000 | ||
Marketable Securities | 40,000 | Taxes Payable | 15,000 | ||
Accounts Receivable | 185,200 | Retained Earnings | 250,000 | ||
Notes Payable, 12%, due in 60 days | 20,000 | Inventory | 165,000 | ||
Capital Stock | 1,150,000 | Allowance for Doubtful Accounts | 20,000 | ||
Salaries Payable | 10,000 | Land | 600,000 | ||
Cash | 65,000 |
Required:
1. Prepare the Current Liabilities section of Spring's 2017 balance sheet.
Spring | |
Partial Balance Sheet | |
As Of December 31, 2017 | |
Current liabilities: | |
Accounts payable | $ |
Notes payable, 12%, due in 60 days | |
Taxes payable | |
Salaries payable | |
Total current liabilities | $ |
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Prepare the liabilities section of the balance sheet.
2. Compute Spring's working capital.
$ ?
3. Compute Spring's current ratio. Round your answer to one decimal place.
? : 1
1.
Spring | |
Partial Balance Sheet | |
As Of December 31, 2017 | |
Current liabilities: | |
Accounts payable | $83,000 |
Notes payable, 12%, due in 60 days | 20,000 |
Taxes payable | 15,000 |
Salaries payable | 10,000 |
Total current liabilities | $128,000 |
2.
Total current assets = Marketable Securities + (Accounts Receivable - Allowance for Doubtful Accounts) + Cash + Inventory
= 40,000 + (185,200 - 20,000) + 65,000 + 165,000
= $435,200
Total current liabilities = $128,000
Spring's working capital = Total current assets - Total current liabilities
= 435,200 - 128,000
= $307,200
3.
Spring's current ratio = Total current assets/Total current liabilities
= 435,200/128,000
= 3.4:1
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