diane corporation is preparing its 2012 balance sheet the compa 258152

Diane Corporation is preparing its 2012 balance sheet. The company records show the following selected amounts at the end of the accounting period, December 31, 2012:

Total assets ………………………….. $530,000

Total noncurrent assets ………………. 362,000

Liabilities:

Notes payable (8%, due in 5 years) …… 15,000

Accounts payable ……………………… 56,000

Income taxes payable ………………….. 14,000

Liability for withholding taxes …………. 3,000

Rent revenue collected in advance …….. 7,000

Bonds payable (due in 15 years) ……… 90,000

Wages payable …………………………. 7,000

Property taxes payable …………………. 3,000

Note payable (10%, due in 6 months) … 12,000

Interest payable ………………………….. 400

Common stock ………………………. 100,000

Required:

1. Compute (a) working capital and (b) the quick ratio (quick assets are $70,000). Why is working capital important to management? How do financial analysts use the quick ratio?

2. Would your computations be different if the company reported $250,000 worth of contingent liabilities in the notes to the statements? Explain.

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