Managerial Accounting
Managerial Accounting
14th Edition
ISBN: 9781337270595
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 14, Problem 8E

Current position analysis

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:

Chapter 14, Problem 8E, Current position analysis The bond indenture for the 10-year, 9% debenture bonds issued January 2,

  1. A. List the errors in the determination of the three measures of current position analysis.
  2. B. Is the company satisfying the terms of the bond indenture?
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