Question

Current Liabilities and Ratios Several accounts that appeared on Spring's 2017 balance sheet are as follows:...

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

Homework Answers

Answer #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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