On June 30, Year 3, Franza Company’s total current assets were $900,000 and its total current liabilities were $360,000. On July 1, Year 3, Franza issued a short-term note to a bank for $72,000 cash. Required a. Compute Franza’s working capital before and after issuing the note. b. Compute Franza’s current ratio before and after issuing the note. (Round your answers to 2 decimal places.)
On June 30, Year 3, Franza Company’s total current assets were $900,000 and its total current liabilities were $360,000. On July 1, Year 3, Franza issued a short-term note to a bank for $72,000 cash. Required a. Compute Franza’s working capital before and after issuing the note. b. Compute Franza’s current ratio before and after issuing the note. (Round your answers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On June 30, Year 3, Franza Company’s total current assets were $900,000 and its total current liabilities were $360,000. On July 1, Year 3, Franza issued a short-term note to a bank for $72,000 cash.
Required
a. Compute Franza’s
b. Compute Franza’s
Transcribed Image Text:On June 30, Year 3, Franza Company's total current assets were $900,000 and its total current liabilities were $360,000. On July 1.
Year 3. Franza issued a short-term note to a bank for $72,000 cash.
Requlred
a. Compute Franza's working capital before and after issuing the note.
b. Compute Franza's current ratio before and after issuing the note. (Round your answers to 2 declmal places.)
Answer is complete but not entirely correct.
Before the
After the
transaction
transaction
Working capital
612,000 8
a.
540,000
b.
Current ratio
2.50
2.70 8
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