Balahce Shee 12/31/20XX Current Assets Current Llabilities 310 000 Accounts paya

Question

Balahce Shee 12/31/20XX Current Assets Current Llabilities 310 000 Accounts payable 225 000Shor-term notes Accounts receivable 2.000 dess doubiful accounts) Temporary investment Prepaid expenses Total Current Assets 250001 Current potonof long-term notes 275000 nterest payable 1000 Taxes payable 5000Accnued payrell 12.000 20.000 12.000 41,000 Total Current Liabilities Long-term Liablities Other long-term labilities Fixed Assets Long-term investments $20 000 Mortgage 0 125000 Totul Long-Term Liabilities less accumu ated depreciation) Plant and·quipment less accumulated depreciation) Fumiture and fatures less accumulated depreciation) Total Net Flxed Assets 0,000 150,000 Capital stock 5,000 Retained eamings 15 000 Total Shareholders' Equity 159,000 TOTAL ASSETS $1.970.000 TOTAL LIABILITIES&EQUITY;$1.970 090 Income Statement For year ended 12/31/20X Revenue Gross sakes $1,000,000 25,000 Cost of Sales Beginning inent Plus goods punchaned imanu/axtured Total goods avalable Less endng inventory $250,000 600,000 $850,000 275,000 $575,000 400,.000 Operating Expenses Total seling eperces $110,000 Total Generstrative expenses Total operating xpenes Net income before interest and taxes $218,700 328,700 $71,300 $10,200 561,100 $24,440 Using the above balance sheets, what was XYZ's quick ratio in 20122 1.16 o 3.14 o 2.99

Explanation / Answer

Quick Ratio = Cash + Net A/R + Temporary Investments )/Current Liabilities
Quick Ratio = ($310,000 + $200,000 + $10,000)/ $241,000 = 2.16
If we calculate using Quick ratio formual Options are not matching.
If we calculate below mentioned formula so 2.39 is the correct answer.
Its a prepaid expense should be included or not)
Quick Ratio = CA $850,000 - Inv. $275,000 / $241000 = 2.39

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