Accounts payable $ 30,000 Accounts receivable 65,000 Accrued liabilities 7,000 C
ID: 2443402 • Letter: A
Question
Accounts payable $ 30,000Accounts receivable 65,000
Accrued liabilities 7,000
Cash 20,000
Intangible assets 40,000
Inventory 72,000
Long-term investments 100,000
Long-term liabilities 75,000
Marketable securities 36,000
Notes payable (short-term) 20,000
Property, plant, and equipment 625,000
Prepaid expenses 2,000
____ 19. Based on the above data, what is the amount of working capital?
a. $238,000
b. $138,000
c. $178,000
d. $64,000
____ 20. Based on the above data, what is the quick ratio, rounded to onedecimal point?
a. 2.4
b. 3.4
c. 2.1
d. 1.5
Explanation / Answer
Working Capital = [Current Assets – Current Liabilities]
Current Assets = [Accounts receivables + Cash + Inventory + Marketable securities + Prepaid expenses]
Current Assets = [$65,000 + $20,000 + $72,000 + $36,000 + $2,000]
Current Assets = $195,000
Current Liabilities = [Accounts payable + Accrued liabilities + Notes payable(short-term)
Current Liabilities = [$30,000 + $7,000 + $20,000]
Current Liabilities = $57,000
Working Capital = [$195,000 - $57,000]
Working Capital = $138,000
Correct option is (b) $138,000
Quick Ratio = [(Current Assets – Inventory – Prepaid expenses) / Current liabilities]
Quick Ratio = [Quick Assets / Current Liabilities]
Quick Ratio = [($195,000 - $72,000 - $2,000) / $57,000]
Quick Ratio = [$121,000 / $57,000]
Quick Ratio = 2.1
Correct option is (c) 2.1
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