19A bank will only continue a credit line for one of its small business customers if the small business can keep an acid-test greater than 1. The company's reported current accounts are as follows:. Cash: $6,000• Accounts receivable (net): $19,000• Inventory: $8,000• Short-term investment: $4,500• Current liabilities: $17,000Which decision should the bank make?Maintain the credit line because the acid-test ratio is 2.21.O Close the credit line because the acid-test ratio is 0.45.O Close the credit line because the acid-test ratio is 0.58.Maintain the credit line because the acid-test ratio is 1.74.NEXT >BOOKMARK

Current assets are assets in the form of cash or can be converted into cash within a year. Quick…

Answered: 19 A bank will only continue a credit…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4 Problem From the following particulars, prepare Bank reconciliation statement of Mr. Naveed as on June 30, 2002. · Balance as per bank book Dr. 32,000 · Cheques deposited but not yet collected by bank 20,200 · Cheques issued but not yet paid by bank 13,000 · Dividend credited by bank on June 30, but the intimation was received later 2,000 · Interest credited by bank 250 · Bank charges debited by bank 50 It is assumed that books of accounts are not closed yet.
Problem 3 Serato Company keeps all Its cash In a checking acount. An examination of the entity's accounting records and bank statement for the month ended December 31, 2020 revealed a bank statement balance of P8.469.000 and a book balance of P8,524,000. A deposit of P950,000 placed in the bank's night depository on December 29 does not appear on the bank Statement. Checks outstanding on December 31 amount to P270, 000. The bank statement snows that on December 25, the bank collected a note for Serato Company and credited the proceeds of P935,000 to the entity's account. The proceeds included P35,000 interest, all or Wich Serato Company earned during the current period, Serato Company has not yet recorded the said collection. Serato Company discovered that check number 1000759 written in December for P183,000 in payment of an account had been recorded in the entity's records as P138,000. Included with the December 31 bank statement was an NSF check for P250,000 that Serato Company had…
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Question 55 Choose the correct answer from the choices.
38 Assume that Arkan Majan International LLC sold goods to its customer on credit for OMR 2500 and received notes receivables for the same amount. The customer directly deposited the amount of OMR2500 in company bank account that the company unaware. The company received the bank statement in which OMR 2500 is showing more as compared to company’s cash book balance. Therefore while preparing the Bank Reconciliation statement, what adjustment the accountant will do? Choose the correct answer from the following given options. a. Add OMR2500 to the bank statement balance b. Add OMR2500 to the cash book balance c. Less OMR2500 from the cash book balance d. Less OMR2500 from the bank statement balance Clear my choice
Question 8 to Question 10 are based on the Balance Sheet information of Good Bank Bad Bank below: Good Bank: Cash Good loans Bad Loans Total Bad Bank: Cash Loans A) $1,500. B) $1,200. C) $380. $200 Deposits $1,000 Purchased funds $380 Equity D) $300. $1,580 $240 Bonds Total $240 Bad Bank buys the bad loans for $300. In order to finance the purchase of the bad loan from the Good Bank, the Bad Bank issues additional bonds in the amount of $60. What will be the total assets of Good Bank after the sale of the loans? E) None of the above. O Preferred stock Common stock $1,000 $300 $280 $1,580 $120 $40 $80 $240
1.5 It is evident that cash is not being controlled well in the business. Identify two problems and provide advice to the owner as to how these problems can be avoided in future. Problem Advice
9
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thempt 1 You just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all exces reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar. If the reserve requirement is 12%, how much will your deposit increase the total value of checkable bank deposits? 0.14 Incamect If the reserve requirement is 4%, how much will your deposit increase the total value of checkable deposits? 0.04 $. Inomect Increasing the reserve requirement increases. the Incorect money supply.
Current Attempt in Progress Bramble Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. As a result, Bret Turrin handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations.The balance per the bank statement on October 31, 2020, was $17,820. Outstanding checks were No. 62 for $150.10, No. 183 for $186, No. 284 for $267.75, No. 862 for $200.70, No. 863 for $232.00, and No. 864 for $177.10. Included with the statement was a credit memorandum of $179.80 indicating the collection of a note receivable for Daisey Company by the bank on October 25. This memorandum has not been recorded by Daisey.The company’s ledger showed one Cash account with a balance of $21,870.00. The balance included undeposited cash on hand. Because of the lack…
Which of the following statements about the company's financial operations and financial decisions is FALSE? If your company overdraws its checking account, the Global Community Bank will automatically issue your company a 1-year loan in an amount sufficient to bring your ending cash balance up to zero. The interest rate charged on overdraft loans is always 2% above whatever interest rate your company would otherwise pay on a 1-year loan from the GCB (for example, if your company's B credit rating entitled your company to a 1-year loan carrying a 6.5% interest rate, then the interest rate on a 1-year overdraft loan would be 8.5%). If the company needs to secure additional capital, it can take out loans with 1-year, 5-year. and/or 10-year terms from the Global Community Bank and/or it can issue new shares of common stock. The company's banking arrangement with the Global Community Bank calls for the company to be paid interest on any positive cash balance in the company checking…

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