Question

Use the following data to calculate the current ratio. Whispering Winds Corp. Balance Sheet December 31,...

Use the following data to calculate the current ratio.

Whispering Winds Corp.
Balance Sheet
December 31, 2022

Cash and cash equivalents

 $74500

Accounts payable

 $125000

Accounts receivable

 103500

Salaries and wages payable

 10300

Inventory

 135000

Bonds payable

 151000

Prepaid insurance

 76000

Total liabilities

 $286300

Stock investments

 198500

Land

 187000

Buildings

 $210000

Common stock

 $278700

Less: Accumulated depreciation

 (64000) 146000

Retained earnings

 493000

Trademarks

 137500

      Total stockholders' equity

 $771700

Total assets

 $1058000

           Total liabilities and            stockholders' equity

 $1058000

A= 3.28:1

B= 2.35: 1

C= 1.95:1

D= 2.88:1

Business   Accounting   
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Homework Answers

Answer #1

Solution :

The Answer is (D) 2.88 : 1

Working :

Current Ratio = Current Assets / Current Liabilities

Current Assets :

Cash and Cash Equivalent $ 74,500
Account Receivable $ 103,500
Inventory $ 135,000
Prepaid Insurance $ 76,000
Total Current Assets $ 389,000

Current Liabilities :

Account Payable $ 125,000
Salary and Wagwa Payable $ 10,300
Total Current Liabilities $ 135,300

Current Ratio = $ 389,000 / $ 135,300

= 2.88 : 1

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