The chief financial officer (CFO) of Indigo Corporation requested that the accounting department prepare a preliminary balance sheet on December 30, 2025, so that the CFO could get an idea of how the company stood. He knows that certain debt agreements with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows. Current assets Cash Accounts receivable Prepaid insurance Equipment (net) Total assets Current liabilities Accounts payable Salaries and wages payable Long-term liabilities Notes payable Total liabilities Stockholders' equity Common stock Retained earnings (a) Indigo Corporation Balance Sheet December 30, 2025 Liabilities and Stockholders' Equity Total liabilities and stockholders' equity Assets Current ratio Working capital $ $30,000 36,000 6,000 $ 24,000 12,000 120,000 60,000 $72,000 240,000 $312,000 $36,000 96,000 132,000 180,000 Calculate the current ratio and working capital based on the preliminary balance sheet. (Round current ratio to 1. decimal place, e.g. 0.7:1) $312,000

The chief financial officer (CFO) of Indigo Corporation requested that the accounting department prepare a preliminary balance sheet on December 30, 2025, so that the CFO could get an idea of how the company stood. He knows that certain debt agreements with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows. Current assets Cash Accounts receivable Prepaid insurance Equipment (net) Total assets Current liabilities Accounts payable Salaries and wages payable Long-term liabilities Notes payable Total liabilities Stockholders' equity Common stock Retained earnings (a) Indigo Corporation Balance Sheet December 30, 2025 Liabilities and Stockholders' Equity Total liabilities and stockholders' equity Assets Current ratio Working capital $ $30,000 36,000 6,000 $ 24,000 12,000 120,000 60,000 $72,000 240,000 $312,000 $36,000 96,000 132,000 180,000 Calculate the current ratio and working capital based on the preliminary balance sheet. (Round current ratio to 1. decimal place, e.g. 0.7:1) $312,000

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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