Current Liabilities and Ratios Several accounts that appeared on Snow\'s 2017 ba

Question

Current Liabilities and Ratios Several accounts that appeared on Snow's 2017 balance sheet are as follows: $81,000 Equipment 40,000 Taxes Payable 153,200 Retained Earnings 20,000 Inventory Accounts Payable Marketable Securities Accounts Receivable Notes Payable, 12%, due in 60 days Capital Stock Salaries Payable Cash Required: $950,000 15,000 250,000 165,000 20,000 600,000 1,150,000 Allowance for Doubtful Accounts 10,000 Land 65,000 1. Prepare the Current Liabilities section of Snow's 2017 balance sheet. Snow Partial Balance Sheet As Of December 31, 2017 Current liabilities: Accounts payableV Notes payable, 12%, due in 60 days Taxes payable Salaries payable 81,000 20,000 15,000 10,000 126,000 Total current liabilities Feedback Check My Work Prepare the liabilities section of the balance sheet. 2. Compute Snow's working capital. 297,200 X 3. Compute Snow's current ratio. Round your answer to one decimal place. 2.5 X : 1 Next

Explanation / Answer

Current assets = Accounts Receivable - Allowance for Doubtful Accounts + Cash + Marketable Securities + Inventory = $153,200 - $20,000 + $65,000 + $40,000 + $165,000 = $403,200

Current liabilities = $126,000

2. Working capital = Current assets - Current liabilities = $403,200 - $126,000 = $277,200

3. Current ratio = Current assets / Current liabilities = $403,200 / $126,000 = 3.2

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