The Post Closing Trial Balance for Adam Samuel Corporation on December

question 95

Essay

The post closing trial balance for Adam Samuel Corporation on December 31, 2013, is shown below.
a. Calculate the current ratio and the debt ratio. Assume the unearned service revenue will be earned within six months. Round to two decimals.
b. Assume on December 31, 2013, Adam Samuel Corporation borrows $50,000 from the First Street Bank and issues a 6%, 6-month note. Recalculate the current ratio and the debt ratio. Round to two decimals.

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Definitions:

Direct Labor Costs

Expenses that can be directly traced to the production of specific goods or services, including wages and benefits of workers involved in production.

Raw Materials

Basic substances in their natural, modified, or semi-processed states used as inputs for production.

Standard Cost System

An accounting method that uses cost standards for material, labor, and overhead charges to control costs and assess operational efficiency.

Direct Labor Standards

Direct Labor Standards define the expected labor time and cost necessary to produce a unit of product, facilitating budgeting and performance evaluation.