Question 1 The following amounts were reported by Liquid Company in its most rec

Question

Question 1

The following amounts were reported by Liquid Company in its most recent statement of financial position:

(a)

Calculate the current ratio and quick ratio for Liquid Company. (Round answers to 2 decimal places, e.g. 15.25.)

Cash $53,000 Accounts receivable 130,000 Short-term investments 28,000 Inventory 390,000 Prepaid insurance 40,000 Capital assets (net) 960,000 Accounts payable 99,000 Wages and salaries payable 37,000 Income tax payable 57,000 Sales tax payable 10,000 Short-term notes payable 81,000 Five-year bank loan 50,000

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Cash                  53,000.00 Accounts receivable                130,000.00 Short term investments                  28,000.00 Inventory                390,000.00 Prepaid insurance                  40,000.00 Current assets                641,000.00 Accounts payable                  99,000.00 Wages and salaries payable                  37,000.00 Income tax payable                  57,000.00 Sales tax payable                  10,000.00 Short-term notes payable                  81,000.00 Current Liabilities                284,000.00 Current Ratio = 641000/284000                             2.26 Quick Ratio = (641000 - 390000-40000)/284000                             0.74

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