Reference no: EM132795197
Question - Stake Technology Inc. had the following balances:
Account 2014 2013
Cash $59,000 $80,000
Accounts receivable 114,500 177,000
Prepaid interest 20,000 34,500
Trademark 79,500 120,500
Accounts payable 27,000 76,000
Salaries payable 82,000 48,000
Short-term notes payable 73,500 49,000
Unearned rent 35,500 45,500
Long-term notes payable 90,000 152,000
Consulting revenue earned 89,000 123,500
Interest earned 29,000 25,500
Interest expense 39,000 16,000
Rent expense 114,000 91,500
Required -
a) Calculate the working capital for 2014 and 2013. Please make sure your final answer(s) are accurate to the nearest whole number.
b) Is the change in working capital favourable or unfavourable?
c) Calculate the current ratio for 2014 and 2013. Please make sure your final answer(s) are accurate to 2 decimal places.
d) Is the change in current ratio favourable or unfavourable?
e) For the next two questions, assume that on the last day of 2014, the entire $27,000 balance in Accounts payable was paid off by cash. How would the working capital have changed?
f) How would the current ratio have changed?
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