Wildhorse Aristocrat nc. (WA) borrowed $320.000 from Grow Business Bank to finance the purchase of equipment costing $240,000 and to provide $80,000 in cash. The legal documentation states that the loan matures in 20 years, and the principal is to be paid in annual installments of $16,000. The terms of the loan also indicate that WA must maintain a current ratio of 1.25 and cannot pay dividends that will reduce retained earnings below $160,000. The 2024 year-end statement of financial position, immediately prior to the bank loan and the purchase of equipment, follows: Current assets $178.800 Current liabilities $120,000 Non-current assets 618.320 Long-term liabilities 320,000 Common shares 160,000 Retained earnings 197,120 Total assets $797,120 Total liabilities and shareholders' equity $797,120 Prepare the following statement of financial position assuming the maximum dividend is declared and paid. Calculate the current ratio using the updated statement of financial position (round answer to 2 decimal places e.g. 7.25)
Wildhorse Aristocrat nc. (WA) borrowed $320.000 from Grow Business Bank to finance the purchase of equipment costing $240,000 and to provide $80,000 in cash. The legal documentation states that the loan matures in 20 years, and the principal is to be paid in annual installments of $16,000. The terms of the loan also indicate that WA must maintain a
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