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QUALITATIVE ANALYSIS: 1) The following amounts were reported on the December 31, 2019, balance sheet: Cash...

QUALITATIVE ANALYSIS:

1) The following amounts were reported on the December 31, 2019, balance sheet:

Cash ------------------------------------------------------------------- $ 9,000

Accounts receivable --------------------------------------------------- 33,000

Common stock -------------------------------------------------------- 50,000

Wages payable -------------------------------------------------------- 16,000

Retained earnings ----------------------------------------------------- 125,000

Land -------------------------------------------------------------------- 30,000

Accounts payable ------------------------------------------------------ 19,000

Bonds payable --------------------------------------------------------- 110,000

Merchandise inventory ------------------------------------------------ 28,000

Buildings and equipment, net of accumulated depreciation ------- 220,000

Required:

a) Calculate working capital at December 31, 2019.

b) Calculate the current ratio at December 31, 2019.

c) Calculate the acid-test ratio at December 31, 2019.

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Answer #2

Ans: Current assets = Cash + Account receivable + Inventory

= $ 9,000 + $ 33,000 + $ 28,000

= $ 70,000

Current liabiliies = Accounts payable + Wages payable

= $ 19,000 + $ 16,000

= $ 35,000

(a) WOrking capital = Current assets - current liabilities

= $ 70,000 - $ 35,000

= $35,000

(b) Current ratio = Current assets / Current liability

= $ 70,000 / $ 35,000

= 2

(c) acid test ratio = Cash + Account receivable / current liabilities

= ( $ 9,000 + $ 33,000 ) / $ 35000

= $ 42,000 / $ 35,000

= 1.2

answered by: anonymous
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