Current Ratio and Working Capital
the Balance Sheet of Red

question 89

Essay

Current ratio and working capital
The balance sheet of Red Missile Company contained the following items, among others:
$$\begin{array} { | l | r | } \hline \text { Cash } & \$ 180,000 \\\hline \text { Accounts Receivable } & \$ 84,000 \\\hline \text { Inventory } & \$ 124,000 \\\hline \text { Store Equipment (net) } & \$ 236,000 \\\hline \text { Other Assets } & \$ 67,500 \\\hline \text { Mortgage Payable (due in 3 years) } & \$ 169,000 \\\hline \text { Note Payable (due in 10 days) } & \$ 163,000 \\\hline \text { Accounts Payable } & \$ 96,000 \\\hline \text { Capital Stock } & \$ 67,500 \\\hline \text { Retained Earnings } & \$ 197,000 \\\hline\end{array}$$
(a) From the above information compute:
(1) Current assets: $_______
(2) Current liabilities: $______
(3) The current ratio: ______ to 1
(4) Working capital: $______
(b) Assume that Red Missile Company pays the note payable of $163,000, thus reducing cash to $17,000. Compute the following after the completion of this transaction:
(1) The current ratio: ______ to 1
(2) Working capital: $______

Recognize the contributions of size, texture, and interposition as depth cues.

Demonstrate an understanding of perceptual constancy and how it maintains stable perceptions despite changes.

Explain the impact of ocular changes (e.g., distance between eyes) on depth perception.

Describe the principle of unconscious inference and its application in perceptual phenomena.

---

Definitions:

Reality

Everything that actually is, as opposed to what merely appears to be, might have been, or is not. A term of metaphysical praise, as in “what is most real is . . .”

Our Senses

The physiological means of perception, including sight, hearing, touch, taste, and smell, through which individuals interact with their environment.

Copernicus

Proposed the heliocentric model of the universe, placing the Sun rather than the Earth at the center.

Biological Evolution

The process through which different kinds of living organisms are thought to have developed from earlier forms during the history of the earth.