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On May 1, 2020

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On May 1, 2020. Christina Fashions borrowed $95.000 at a bank by signing a four-year, 6% loan. The terms of the loan require equal principal payments of $23.750 and accrued interest at 6% due annually on April 30. The loan agreement requires the company to maintain a minimum current ratio of 2.0. The December 31, 2020. year-end statement of financial position, immediately prior to the reclassification of long-term debt, follows: Current assets $129,600 Current liabilities $48.000 Non-current assets 169,400 Loan payable 95,000 Common shares 80.000 Retained earnings 76,000 Total liabilities and Total assets $299,000 shareholders' equity $299,000 Does Christina Fashions comply with the bank's current ratio requirement prior to recording the accrued interest and reclassification of the current portion of the long-term loan? (Round answer to 1 decimal place, eg. 1.2.) Current ratio Christina Fashions the bank's minimum current ratio. eTextbook and Media List of Accounts Prepare journal entries to record the interest payable on December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Prepare the journal entries to reclassify the portion of the long-term loan as current. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and entero for the amounts.) Account Titles and Explanation Debit Credit
Does Christina Fashions breach the bank's current ratio requirement after preparing the journal entries above? (Round answer to 2 decimal places, eg. 1.25.) Current ratio Christina Fashions the bank's minimum current ratio.