The following are selected entries for Warren Clinic for December,31 2008, liste
ID: 2737830 • Letter: T
Question
The following are selected entries for Warren Clinic for December,31 2008, listed alphabetically.
Account payable 20,000
Account receivable, net 60,000
Cash 30,000
Equity 230,000
Long term debt 120,000
Long-term investments 100,000
Net property and equipment 150,000
Other assets 40,000
Other long-term liabilities 10,000
1. Create a balance sheet
2. Is the Warren Clinic heavily indebted? Explain you conclusion.
3. Is the Warren Clinic profitable? Explain you answer.
4. Warren Clinic wants to borrow $100,000 in a lump sum as working capital in order to implement a strategy to hire more personnel to improve the patient experience.
a. Present the balance sheet as if the loan were effected.
b. Is Warren Clinic heavily indebted? Explain you conclusion.
Explanation / Answer
2
2. Is the Warren Clinic heavily indebted? Explain you conclusion.
At prasent company is not heavily indebted because it has working capital as follow
Working capital= Current Assets- current liabelity
(60000+30,000) -20,000
=70,000
Current ratio= Ca Cl
90,000 20,000
=4.5
3. Is the Warren Clinic profitable? Explain you answer.
Yes company is profitable company at prasent
4. Warren Clinic wants to borrow $100,000 in a lump sum as working capital in order to implement a strategy to hire more personnel to improve the patient experience.
a. Present the balance sheet as if the loan were effected.
b. Is Warren Clinic heavily indebted? Explain you conclusion.
Now we can say that,Clinic is heavily indebted because it has current ratio as follow
Current ratio= Current Assets- Current Liabelity
=190,000P,000
1.58
Current ratio highly reduce from 4.5 to 1.58
Warren Clinic Dec-31-2008 Liabelity Amount in $ Assets Amount in $ Account payable 20000 Account receivable 60000 Cash 30000 Other long-term liabilities 10000 Long term Debt 120000 Long term Investment 100000 Equiy 230000 Net property and equipment 150000 Other assets 40000 380000 380000Related Questions
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