Posted: July 19th, 2016

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Problem 2-4: Financial Statement Ratios

The following items, in alphabetical order, are available from the records of Walker Corporation as of December 31, 2012 and 2011:

12/31/12 12/31/11
Accounts payable 8400 5200
Accounts receivable 27830 35770
Cash 20200 19450
Cleaning supplies 450 700
Interest payable 0 1200
Inventory 24600 26200
Marketable securities 6250 5020
Note payable, due in six months 0 12000
Prepaid rent 3600 4800
Taxes payable 1450 1230
Wages payable 1200 1600

1. Calculate the following as of December 31, 2012 and 2011:
a. Working capital
b. Current ratio

2. On the basis of your answers to (1), comment on the company’s relative liquidity at the beginning and end of the year. Explain the change in the company’s liquidity from the beginning to the end of 2012.

P3-3

Expert Consulting Services Inc. was organized on March 1, 2012, by two former college roommates. The corporation provides computer consulting services to small businesses. The following transactions occurred during the first month of operations.
March 2: Received contributions of $20,000 from each of the two principal owners of the new business in exchange for shares of stock.
March 7: Signed a two-year promissory note at the bank and received cash of $15,000. Interest, along with the $15,0