Chapter 4
Current Liabilities
186
Required
a) Prepare the current liabilities portion of the balance sheet.
b) Based on the information available, calculate the current ratio and comment on the
liquidity of the company.
Analysis
It is recommended to make use of any purchase discounts that are available. Suppose a
company is offered a discount of 2% for a total payable of $100,000 if payment is made within
30 days. The company does not have enough cash to pay for it within the discount period.
What would you suggest the company do?
