Reference no: EM132502614
Current ratio and working capital
The balance sheet of Red Missile Company contained the following items, among others:
Cash$180,000
Accounts Receivable$84,000
Inventory$124,000
Store Equipment (net)$236,000
Other Assets$67,500
Mortgage Payable (due in 3 years)$169,000
Note Payable (due in 10 days)$163,000
Accounts Payable$96,000
Capital Stock$67,500
Retained Earnings$197,000
Question (a) From the above information compute:
(1) Current assets: $________
(2) Current liabilities: $________
(3) The current ratio: ________ to 1
(4) Working capital: $________
Question (b) Assume that Red Missile Company pays the note payable of $163,000, thus reducing cash to $17,000. Compute the following after the completion of this transaction:
(1) The current ratio: ________ to 1
(2) Working capital: $________