\"Exercise 14-7 Frizell Company has the following comparative balance sheet data
ID: 2332875 • Letter: #
Question
"Exercise 14-7 Frizell Company has the following comparative balance sheet data. FRIZELL COMPANY Balance Sheets December 31 2017 2016 $ 15,100 $29,700 Accounts receivable (net)70,30059,000 60,900 49,300 195,000 178,500 $341,300 $316,500 $50,600 $60,900 Mortgage payable (696) 101,500 101,500 Common stock, $10 par 144,000 118,500 45,200 35,600 $341,300 $316,500 Cash Inventory Plant assets (net) Accounts payable Retained earnings Additional information for 2017: 1. 2. 3. Net income was $25,800. Sales on account were $407,000. Sales returns and allowances were $20,700. Cost of goods sold was $199,400. Compute the following ratios at December 31, 2017. (Round answers to 1 decimal place, e.g. 1.6.) (a) Current ratio (b) Acid-test ratio (c) Accounts receivable turnover (d) Inventory turnover times timesExplanation / Answer
Answers
Current ratio
Numerator
/
denominator
Current ratio
Current Assets
/
Current Liabilities
Current ratio
$ 146,300.00
/
$ 50,600.00
2.89
to 1
Current Assets- (15100+70300+60900)
Current Liabilities--($ 50600)
Acid test ratio ratio
Numerator
/
denominator
Acid test ratio
Quick assets
/
Current Liabilities
Acid test ratio
$ 85,400.00
/
$ 50,600.00
1.69
to 1
Quick assets- Current assets-inventory
Quick assets-$146300-60900
Quick assets-$85400
Accounts Receivable Turnover
Numerator
/
denominator
Current ratio
Net Credit Sales
/
Average Accounts Receivable
Current ratio
$ 386,300.00
/
$ 64,650.00
5.98
times
Average Accounts Receivable= (beginning accounts receivable+ Ending Accounts receivable)/2
Average Accounts Receivable=($70300+59000)/2
Average Accounts Receivable= $ 64650
Net credit sales= Sales- Sales returns
Net credit sales= $ 407000-20700
Net credit sales= $ 386300
Inventory Turnover Ratio
Numerator
/
denominator
Current ratio
Cost of Goods sold
/
Average Inventory
Current ratio
$ 199,400.00
/
$ 55,100.00
3.62
times
Average Accounts Receivable= (Beginning Inventory+ Ending Inventory)/2
Average Accounts Receivable=(60900+49300)/2
Average Accounts Receivable=$ 55100
Answers Summery
Current ratio
Numerator
/
denominator
Current ratio
Current Assets
/
Current Liabilities
Current ratio
$ 146,300.00
/
$ 50,600.00
2.89
to 1
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