Current Liabilities and Payroll Accounting

Problem-13: Current Liabilities and Payroll Accounting

Suppose the following financial data were reported by $3M Company for 2019 and 2020

3M Company
Balance Sheets (partial)

Instructions

  1. Calculate the current ratio and working capital for 3M for 2019 and 2020.
  2. Suppose that at the end of 2020, 3M management used 200 million cash to pay off $200 million of accounts payable. How would its current ratio and working capital have changed?

Solution

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Completing the Accounting Cycle  Adjusting the Accounts  Accounting for Merchandising Operations  The Recording Process  Accounting in Action  Inventories  Plant Assets, Natural Resources, and Intangible Assets  Accounting for Receivables  Accounting Information Systems  Corporations: Dividends, Retained Earnings, and Income Reporting  Current Liabilities and Payroll Accounting  Job Order Costing  Sets  Long-Term Liabilities