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45 46 The following information is given for Toy Company for the past two years: 47 48 Current Year Prior Year 49 Prepaid expenses $32,000 $42,000 50 Accrued liabilities $217,000 $176,000 51 Cash $1,028,000 $944,000 52 Wages payable $4,440 $39,500 53 Accounts payable $715,000 $561,000 54 Merchandise inventory $1,259,000 $1,421,000 55 Bonds Payable (due in 10 years) $581,000 $542,000 Short Term Investments $206,000 $169,000 56 (marketable securities) 57 Notes payable (due in 6 months) $295,000 $182,000 58 Accounts receivable, net $845,000 $817,000 59 60 Required: 61 a. Calculate the working capital amount for both years. 62 b. Calculate the current ratio for both years. 63 c. Calculate the acid-test ratio for both years. 64 d. Analyze the company's liquidity by explaining each of your calculations. Classify each amount as Current Asset, Current Liability or NOT Current Asset or Liability. If it is not current, put an X in the space as we will not need the number. If it is current, enter the appropriate amount in the correct column. Not Current Asset or liability Current Year Prior Year Current Assets Current Liab. Current Asset Current Liab Prepaid expenses Accrued liabilities Cash in Bank A Wages Payable Accounts Payable Merchandise Inventory Bonds Payable - Short Term Investment (marketable securities) 3 Notes Payable (due in 6 months) Accounts Receivable, Net Total amounts $0.00 $0.00 $0.00 $0.00 Self Check: Current Prior a. Working Capital Current Assets - Current Liabilities =Working Capital 3 b. Current Ratio Current Assets Current Liabilities Current Ratio c. Acid Test Ratio 5 Cash + AR Net +ST Invest Current Liabilities Acid Test Ratio Anaylsis: See problem instructions 2

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