Dunn Sporting Goods sells athletic clothing and footwear 10 retail customers. Dunn's accountant indicates that the firm's operating cycle averages 6 months. At December 31, 2019, Dunn has the following assets and liabilities: a. Prepaid rent in the amount of 58,500. Dunn's rent is $500 per month. b. A $9,700 account payable due in 45 days. c. Inventory in the amount of $46,230. Dunn expects to sell $38,000 of the inventory within 3 months. The remainder will be placed in storage until September 2020. The items placed in storage should be sold by November 2020. d. An investment in marketable securities in the amount of $1,900. Dunn expects to sell $700 of the marketable securities in 6 months. The remainder are not expected to be sold until 2022. e. Cash in the amount of $1,050. f. An equipment loan in the amount of $60,000 due in March 2024. Interest of $4,500 is due in March 2020 ($3,750 of the interest relates to 2019. with the remainder relating to the first 3 months of 2020). g. An account receivable from a local university in the amount of $2,850. The university has promised to pay the full amount in 3 months. h. Store equipment at a cost of $9,200. Accumulated depreciation has been recorded on the store equipment in the amount of 51,250. Required: 1. Prepare the current asset and current liability portions of Dunn's December 31, 20191 balance-sheet. 2. Compute Dunn's working capital and current ratio at December 31, 2019. 3. CONCEPTUAL CONNECTION As in investor or creditor. what do these ratios tell you about Dunn's liquidity?

Current assets are benefits that can be turned into cash within a year while current liabilities are obligations the company must settle within a year

Dunn's Current Assets: Cash in Hand + Short term securities + Inventory + account receivables + Prepaid rent

= $1,050 + $700 + $46,230 + $2,850 + $6,000

= $56, 830

Dunn's Current Liabilities: Interest payable + Accounts Payable

= $3,750 + $9,700 = $13,340

Part 2 : Working Capital Calculation

Working Capital is how adequately the company can meet its current obligations through it current benefits or assets

= Current Assets/ Current Liabilities

= $56, 830 / $13, 450 = 4.23

Part 3: What do the ratios tell about Dunn's Liquidity:

Dunn's asset can cover its liabilities about 4. 23 times making it more than adequate for the organisation to take care of its current obligations from its current assets in within the short term.