Zeman Dance Hall Inc. sponsors monthly dances and has generated data for the mos

Question

Zeman Dance Hall Inc. sponsors monthly dances and has generated data for the most recent year. Using this data determine Zeman's Current Ratio:

Revenues from adminissions to dances $1,200,000
Utilities expense $150,000
Fees incurred to hire bands $300,000
Building owned by Zeman $300,000
Notes Payable due in 2 years $300,000
Advertising expense $145,000
Office Supplies $10,000
Instrument Rental expense $50,000
Office Equipment $200,000
Salaries Expense $250,000
Accounts Payable $25,000
Salaries Payable $50,000
Cash $275,000

Explanation / Answer

Current Ratio = Current Assets / Current Liabilities

Current Assets
Office Supplies $10,000
Cash $275,000
Total Current Assets = 285,000
-------------------------------------
Current Liabilities
Accounts Payable =$25,000
Salaries Payable = $50,000
Total Current Liabilities = 75,000
---------------------------
=285,000 / 75,000 = 3.80 ------------ Current Ratio

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