Some of the accounts appearing in the yearend financial stat

Some of the accounts appearing in the year-end financial statements of Rogand Grocery, Inc., appear as follows. This list includes all of the company’s current assets and current liabilities.

Some of the accounts appearing in the year-end financial statements of Rogand Grocery, Inc., appear as follows. This list includes all of the company\'s current assets and current liabilities Sales Accumal ated depreciation: equipment Notes payable (due in 90 days) Retained earnings Cash Capital stock Marketable securities Accounts payable Mortgage payable (due in 15 years) Salaries payable Dividends Income taxes payable Accounts receivable Inventory Unearned revenue Unexpired insur ance $1,880, 000 370, 000 70, 000 241, 320 69, 400 150, 000 175, 040 128, 100 320, 000 7, 570 25, 000 14, 600 230, 540 179, 600 10, 000 4, 500 Required a. Prepare a schedule of the company\'s current assets and current liabilities. Select the appropriate items from the preceding list. b-1. Compute the current ratio b-2. Compute the amount of working capital b-3. State whether you consider the company to be in a strong or weak current position.

Solution

a)

b) CURRENT RATIO = Current Assets / Current Liabilities

= $ (668940/ 220270) =$ 3.04

c) WORKING CAPITAL = Current Assets - Current Liabilities

= $668940 - $220270 = $448670

d) Comapny\'s current position - The ideal current ratio is 2:1. Here the company\'s current ratio is more than the ideal ratio which indicates that vompany has a strong solvency position. Therefore company will not face any liquidity problem and it has sufficient amount of cash to meet its short term obligations. The financial position of the company is very good.

Rogand Grocery, Inc.

Current Assets: cash	$ 69400
Marketavle securities	175040
Accounts Receivables	230500
Inventories	179500
Unearned Revenue	10000
Unexpired Insurance	4500
Total Current Assets	668940
Current Liablities: Notes payable	70000
Accounts payable	128100
Salaries Payable	7570
Income tax Payable	14600
Total Current Liablities	220270