Pronghorn Equipment Co. closes its books regularly on December31, but at the end of 2017 it held its cash book open so that amore favorable balance sheet could be prepared for credit purposes.Cash receipts and disbursements for the first 10 days of Januarywere recorded as December transactions. The information is givenbelow.
1. January cash receipts recorded in the December cash booktotaled $53,800, of which $37,800 represents cash sales, and$16,000 represents collections on account for which cash discountsof $324 were given.
2. January cash disbursements recorded in the December checkregister liquidated accounts payable of $21,325 on which discountsof $232 were taken.
3. The ledger has not been closed for 2017.
4. The amount shown as inventory was determined by physicalcount on December 31, 2017. The company uses the periodic method ofinventory.
Prepare any entries you consider necessary to correctPronghorn’s accounts at December 31.
To what extent was Pronghorn Equipment Co. able to show a morefavorable balance sheet at December 31 by holding its cash bookopen? (Compute working capital and the current ratio.) Assume thatthe balance sheet that was prepared by the company showed thefollowing amounts: (Round ratios to 2 decimal place, e.g.4.56.)
Dr. Cr.
Cash $38,740
Accountsreceivable 38,650
Inventory 66,480
Accountspayable $45,210
Other currentliabilities 13,733
Per BalanceSheet After Adjustment
Workingcapital $ $
Currentratio to1 to 1
How do we find working capital and currentratio per balance sheetand Afteradjustment
That is all information that I have
