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.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 12C
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