The Boezi Corporation is beginning to report its financial statements at the end

Question

The Boezi Corporation is beginning to report its financial statements at the end of Year Six. Preliminary information indicates that the company holds $90,000 in current assets and $210,000 in noncurrent assets. The company also plans to report current liabilities of $40,000 and noncurrent liabilities of $160,000. However, at the very end of the year, two final transactions take place. First, a $12,000 payment is made on an account payable. Second, a $21,000 collection is received from an account receivable. a. After recording these two transactions, what should the company report as the amount of its working capital? b. After recording these two transactions, what should the company report as its current ratio?

Explanation / Answer

Current assets = 90000-12000= 78000 Current liabilities = 40000-12000= 28000 a Working capital = 78000-28000 = 50000 b Corking capital = 78000/28000= 2.79

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