**Financial Analysis of Rundle Company**On June 30, Year 3, Rundle Company’s total current assets were $501,000, and its total current liabilities were $274,000. On July 1, Year 3, Rundle issued a short-term note to a bank for $39,400 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 2 decimal places.)**Table: Financial Metrics Before and After the Transaction**| | Before the Transaction | After the Transaction ||-----------------------------|------------------------|-----------------------|| a. Working capital | | || b. Current ratio | | |**Instructions:**1. **Working Capital Calculation:** - Working Capital = Current Assets - Current Liabilities2. **Current Ratio Calculation:** - Current Ratio = Current Assets / Current LiabilitiesThis exercise aims to understand the impact of financial transactions on a company's liquidity position. Fill in the table by computing the values based on the formulas provided.

1. WORKING CAPITAL : = ( CURRENT ASSET - CURRENT LIABILITIES ) 2. CURRENT RATIO : = ( CURRENT ASSET / CURRENT LIABILITIES ) DETAILS BEFORE TRANSACTION AFTER TRANSACTION CURRENT ASSETS $501,000 $540,400 CURRENT LIABILITIES $274,000 $313,400 WORKING CAPITAL ( CURRENT ASSET - CURRENT LIABILITIES ) $227,000 $227,000 CURRENT RATIO ( CURRENT ASSET / CURRENT LIABILITIES ) 1.82 1.72 NOTE : WHEN A SHORT TERM NOTE IS ISSUED WE WILL RECEIVE CASH WHICH WILL INCREASE OUR CURRENT ASSETS AND SHORT TERM WILL ALSO INCREASE IS A CURRENT LIABILITIES . SO IN ABOVE CASH WE WILL ADD $39,400 TO BOTH CURRENT ASSET AS WELL AS CURRENT LIABILITIES .

Business

Accounting

On June 30, Year 3, Rundle Company's total current assets were $501,000 and its total current liabilities were $274,000. On July 1, Year 3, Rundle issued a short-term note to a bank for $39,400 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 2 decimal places.) Before the After the transaction transaction Working capital a. b. Current ratio

On June 30, Year 3, Rundle Company's total current assets were $501,000 and its total current liabilities were $274,000. On July 1, Year 3, Rundle issued a short-term note to a bank for $39,400 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 2 decimal places.) Before the After the transaction transaction Working capital a. b. Current ratio

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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