Exercise 14-7 Frizell Company has the following comparative balance sheet data.

Question

Exercise 14-7 Frizell Company has the following comparative balance sheet data. FRIZELL COMPANY Balance Sheets December 31 2017 2016 Cash 15,100 29,500 Accounts receivable (net) 70,900 60,000 60,90050,100 197,000 175,000 343,900 $314,600 $49,100 $59,200 Mortgage payable (696) 108,000 108,000 Common stock, $10 par 138,500 124,500 48,30022,900 $343,900 $314,600 Inventory Plant assets (net) Accounts payable Retained earnings Additional information for 2017 1. Net income was $25,700. 2. Sales on account were $410,500. Sales returns and allowances were $19,500. 3. Cost of goods sold was $197,400. Compute the following ratios at December 31, 2017. (Round answers to 1 decimal place, e.g. 1.6.)

Explanation / Answer

a) Current ratio current assets/current liabilities 146,900/49,100 3.0 answer b) Acid test ratio (current assets-inventory)/current liabilities 86,000/49,100 1.8 answer c) Account receivable turnover Net sales/average account receivable average account receivable=(70900+60000)/2 65450 (410500-19500)/65450 6.0 times d) inventory turnover cost of goods sold/avereage inventory average inventory =(60900+50100)/2 55500 197400/55500 3.56 times

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