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View History Bookmarks People Window Help Exercise 18-7 cure Ihttps:/ledugen.wileyplus.com/edugen/shared/assignment/test/gprint.uni s:/ /edugen FRIZELL COMPANY Balance Sheets December 31 Weygand 2017 2016 Cash s 16,000 $29,500 Accounts rectivable (net) 70,100 9,300 59,100 49,300 200,000 178,500 345,200 $316,600 $49,400 $59,000 Frizell Comp Mortgage payable (696) 106,500 106,500 Common stock, $10 par 142,000 125,000 47,300 26,100 $345,200 $316,600 Accounts recživa ment Plant assets (net) Exercise 1 Accounts payable Retained earnings Additional information for 2017: Cash Accounts red1. Net income was $25,600. Inventory2. Sales on account were $410,000. Sales returns and allowances were $19,800. Plant assets 3. Cost of goods sold was $198,100 Compute the following ratios at December 31, 2017. (Round answers to 1 decimal place, e.g. 1.6) Mortgage (a) Current ratio Common vto(D) Retained ear (b) Acid-test ratio (c) Accounts receivable turnover times times Additional in (d) Inventory turnover Question Att MacBook Air

Explanation / Answer

a) Current ratio = Current assets/current liabilities

                      = 145200/49400

Current ratio = 2.9:1

b) Acid test ratio = (cash+account receivable)/Current liabilities

                         = (16000+70100)/49400

Acid test ratio = 1.7:1

c) Account receivable turnover = Sales/Average account receivable

                                            = 390200/64700

Account receivable turnover = 6.0 Times

d) Inventory turnover = Cost of goods sold /average inventory

                              = 198100/54200

Inventory turnover = 3.7 Times

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