Help Save&Exit; Submit The following financial Information was taken from a firm

Question

Help Save&Exit; Submit The following financial Information was taken from a firm's accounting records on December 31, 2019. Use this information to determine the items below Cash Accounta Receivable (Net) Merchandise Inventory Property, Plant, and Equipment (Net) Accounts Payable Bonds Payable, 2028 45,000 175,800 547,200 500,000 160,000 200,000 1. Working capital. 2. Current ratio. (Round your answer to 2 decimal places.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) Working capital 2. Current ratio . Acid-test ratio to 1 to 1

Explanation / Answer

1) Calculation of working capital: Working capital= current assets- current liabilities Current assets=cash + accounts recievable+merchandise inventory current assets=45000+175800+547200=$678000 Current liability= accounts payable=$160000 Working capital= 678000-160000=$518000 2) Calculation of current ratio: Current ratio= Current assets/current liability Current ratio=678000/160000=4.24 3) Calculation of acide-test ratio: Acid-test ratio= quick assets/current liability Acid-test ratio=(678000-547200)/160000=130800/160000 Acid-test ratio=0.82

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