The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows: 1. Current assets: Cash $102,000 Temporary investments 48,000 Accounts and notes receivable (net) 120,000 Merchandise inventory 36,000 Prepaid expenses 24,00
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required
working capital of $100,000, acurrent ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows:1. Current assets: Cash $102,000 Temporary investments 48,000 Accounts and notes receivable (net) 120,000 Merchandise inventory 36,000 Prepaid expenses 24,000 Intangible assets 124,800 Property, plant, and equipment 55,200 Total current assets (net) $510,000 Current liabilities: Accounts and short-term notes payable $96,000 Accrued liabilities 204,000 Total current liabilities 300,000 Working capital $210,000 2. Current ratio 1.7 $510,000 ÷ $300,000 3. Quick ratio 1.2 $115,200 ÷ $96,000 a. Find the errors in the determination of the three measures of current position analysis. Then provide the correct amounts below. If required, round the ratios to one decimal place.
Working capital $fill in the blank 1 Current ratio fill in the blank 2 Quick ratio fill in the blank 3 b. Is the company satisfying the terms of the bond indenture?
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