Compute Valley Forge’s current ratio at December 31, 2008, and again at December 31, 2009. Did the…
We're the ideal place for homework help. If you are looking for affordable, custom-written, high-quality and non-plagiarized papers, your student life just became easier with us. Click either of the buttons below to place your order.
Order a Similar Paper
Order a Different Paper
(Learning Objective 6: Evaluating the current ratio) Valley Forge Corporation reported the following current accounts at December 31, 2008 (amounts in thousands):
Cash
$1,700
Receivables
5,600
Inventory
1,800
Prepaid expenses
800
Accounts payable
2,400
Unearned revenues
1,200
Accrued expenses payable
1,700
During 2009, Valley Forge completed these selected transactions:
• Sold services on account, $8,500.
• Depreciation expense, $400.
• Paid for expenses, $7,100.
• Collected from customers on account, $7,500.
• Accrued expenses, $300.
• Paid on account, $1,000.
• Used up prepaid expenses, $200.
Compute Valley Forge’s current ratio at December 31, 2008, and again at December 31, 2009. Did the current ratio improve or deteriorate during 2009? Comment on the level of the company’s current ratio.