Several accounts that appeared on Kruses 2010 balance sheet are as follows: Acco
ID: 2373388 • Letter: S
Question
Several accounts that appeared on Kruses 2010 balance sheet are as follows:
Accounts payable 55,000
marketable securities 40,000
accounts recievable 180,000
notes payable, 12%, due in 60 days 20,000
capital stock 1,150,000
salaries payable 10,000
cash 15,000
equipment 950,000
taxes payable 15,000
retained earnings 250,000
inventory 85,000
allowance for doubtful accounts 20,000
land 600,000
1. Prepare the current liabilities section of Kruses 2010 balance sheet
2. compute Kruses working capital
3. compute kruses current ratio. What does this ratio indicate about kruses condition?
Explanation / Answer
1.
Current Liability
Accounts Payable
55000
Notes Payable
20000
Salaries Payable
10000
Taxes Payable
15000
100000
Current Assets
Cash
15000
Marketable Securities
40000
Accounts Recievables
180000
Inventory
85000
320000
2. Working Capital = Current Asset %u2013 Current Liability = 320000 %u2013 100000 = 220000
Current Ratio = Current Asset / Current Ratio = 320000 / 100000 = 3.2
A current Ratio of 3.2 indicates that the finances of company are good and it have enough working capital to handle its finances.
Current Liability
Accounts Payable
55000
Notes Payable
20000
Salaries Payable
10000
Taxes Payable
15000
100000
Current Assets
Cash
15000
Marketable Securities
40000
Accounts Recievables
180000
Inventory
85000
320000
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