Question

A company's trial balance included the following account balances: Accounts payable $19,257 Accounts receivable 81,386 Cash...

A company's trial balance included the following account balances: Accounts payable $19,257 Accounts receivable 81,386 Cash 73,374 Income tax payable 3,562 Inventories 25,866 Note payable, due in two years 1,759 Equipment 54,628 Stockholders' equity 203,308 Supplies 5,562 Wages payable 12,930

What is the amount of the current ratio (round to two decimal places)? 5.21, 1.00, 4.99 or 2.01

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Answer #1

The correct answer is 5.21

Note :

a. Current Ratio = Current Assets / Current Liabilities

= $ 186,188 /$ 35,749

= 5.21

b.

Accounts Receivable 81,386
Cash 73,374
Inventories 25,866
Supplies 5,562
Total Current Assets 186,188

c.

Accounts Payable 19,257
Income Tax Payable 3,562
Notes Payable -   
Wages Payable 12,930
Total Current Liabilities

35,749

d. SInce the Notes payable are due in more than one year, it is not included in the current liabilities.

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