Practice Help ### Problem Statement**Context:**On June 30, Year 3, Rundle Company's total current assets were $497,500, and its total current liabilities were $271,500. On July 1, Year 3, Rundle issued a long-term note to a bank for $41,200 cash.**Required:**a. **Compute Rundle's working capital** before and after issuing the note.b. **Compute Rundle's current ratio** before and after issuing the note. *(Round your answers to 1 decimal place.)*### Analysis Table| | Before the Transaction | After the Transaction ||-------------------------------|------------------------|-----------------------|| a. Working capital | | || b. Current ratio | | |

Ratio analysis means where different ratio of various years of years companies has been compared and results are interpreted to make effective decision regarding future course of action. CALCULATION OF RATIO FOR RUNDLE COMPANY Answer a :- Working capital before and after issuing the note Current assets before issue of note = $ 497,500 Current liabilities before issue of note = $ 271,500 Working capital before issue of note = Current assets – Current liabilities Working capital before issue of note = 497,500 – 271,500 Working capital before issue of note = $ 226,000 Current assets after issue of note = 497,500 + 41,200 = $ 538,700 Current liabilities after issue of note = $ 271,500 Working capital after issue of note = Current assets – Current liabilities Working capital after issue of note = 538700 – 271,500 Working capital after issue of note = $ 267,200 Answer b :- Current ratio before and after issuing the note Current ratio before issue of note = Current assets / Current liabilities Current ratio before issue of note = 497500/271500 Current ratio before issue of note = 1.8 : 1 Current ratio after issue of note = Current assets / Current liabilities Current ratio after issue of note = 538700/271500 Current ratio after issue of note = 2.0 : 1 S. No. Particulars Before the transaction After the transaction A Working capital 226,000 267,200 B Current ratio 1.8 : 1 2.0 : 1