On May 1, 2024, Elizabeth Fashions borrowed $88,000 at a bank by signing a four-year, 6% loan. The terms of the loan require equal principal payments of $22,000 and accrued interest at 6% due annually on April 30. The loan agreement requires the company to maintain a minimum current ratio of 2.0. The December 31, 2024, year-end statement of financial position, immediately prior to the reclassification of long-term debt, follows: Current assets Non-current assets Total assets Show Transcribed Text Current ratio $107,360 156,640 Elizabeth Fashions $264,000 Current liabilities Loan payable Common shares Retained earnings Total liabilities and shareholders' equity Does Elizabeth Fashions comply with the bank's current ratio requirement prior to recording the accrued interest and reclassification of the current portion of the long-term loan? (Round answer to 2 decimal places, e.g. 1.20.) $44,000 88,000 66,000 66,000 $264,000 the bank's minimum current ratio.
On May 1, 2024, Elizabeth Fashions borrowed $88,000 at a bank by signing a four-year, 6% loan. The terms of the loan require equal principal payments of $22,000 and accrued interest at 6% due annually on April 30. The loan agreement requires the company to maintain a minimum current ratio of 2.0. The December 31, 2024, year-end statement of financial position, immediately prior to the reclassification of long-term debt, follows: Current assets Non-current assets Total assets Show Transcribed Text Current ratio $107,360 156,640 Elizabeth Fashions $264,000 Current liabilities Loan payable Common shares Retained earnings Total liabilities and shareholders' equity Does Elizabeth Fashions comply with the bank's current ratio requirement prior to recording the accrued interest and reclassification of the current portion of the long-term loan? (Round answer to 2 decimal places, e.g. 1.20.) $44,000 88,000 66,000 66,000 $264,000 the bank's minimum current ratio.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ashavinbhai

Transcribed Image Text:On May 1, 2024, Elizabeth Fashions borrowed $88,000 at a bank by signing a four-year, 6% loan. The terms of the loan require equal
principal payments of $22,000 and accrued interest at 6% due annually on April 30. The loan agreement requires the company to
maintain a minimum current ratio of 2.0. The December 31, 2024, year-end statement of financial position, immediately prior to the
reclassification of long-term debt, follows:
Current assets
Non-current assets
Total assets
Show Transcribed Text
Current ratio
Elizabeth Fashions
$107,360
156,640
Show Transcribed Text
$264,000
Current liabilities
Loan payable
Common shares
Retained earnings
Total liabilities and shareholders' equity
c
Does Elizabeth Fashions comply with the bank's current ratio requirement prior to recording the accrued interest and
reclassification of the current portion of the long-term loan? (Round answer to 2 decimal places, e.g. 1.20.)
$44,000
88,000
66,000
66,000
the bank's minimum current ratio.
$264,000
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