Question

On June 30, 2018, Rundle Company’s total current assets were $496,000 and its total current liabilities were $278,500. On July 1, 2018, Rundle issued a short-term note to a bank for $38,200 cash.

Required

1. Compute Rundle’s working capital before and after issuing the note.

2. Compute Rundle’s current ratio before and after issuing the note. (Round your answers to 2 decimal places.)

	before the transaction	after the transaction
working capital
current ratio

Answer 1

Given,

Current Assets = $496000

Current Liabilities = $278500

Short term note = $38200

After the transaction,

Total current liabilities = $278500 + $38200 = $316700

	Before the transaction	After the transaction
Working Capital	$217500	$179300
Current Ratio	1.78	1.57