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Wildhorse Aristocrat nc.(WA) borrowed $210,000 from Grow Business Bank to finance the purchase of equipment...

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Accounting

Wildhorse Aristocrat nc.(WA) borrowed $210,000 from Grow Business Bank to finance the purchase of equipment costing $157,500
and to provide $52,500 in cash. The legal documentation states that the loan matures in 20 years, and the principal is to be paid in
annual instalments of $10,500. The terms of the loan also indicate that WA must maintain a current ratio of 1.25 and cannot pay
dividends that will reduce retained earnings below $105,000. The 2024 year-end statement of financial position, immediately prior to
the bank loan and the purchase of equipment, follows:
Prepare the following statement of financial position assuming the maximum divided is declared and paid.
Current Assets
Non-current Assets
Total Assets
$
$
Current Liabilities
Long-term Liabilities
Common Shares
Retained Earnings
Total Liabilities and Shareholder's Equity
$
$
Calculate the current ratio using the updated statement of financial position. (Round answer to 2 decimal places, e.g.7.25.)
Current ratio
image

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