Question

The balance sheet of Jones Design Company contained the following items, among others: Cash 60,000 Accounts...

The balance sheet of Jones Design Company contained the following items, among others:

Cash 60,000
Accounts Receivable 82,000
Inventory 12,000
Building (net) 450,000
Other Assets 55,500
Mortgage payable (due in 3 years) 118,000
Notes Payable (due in 6 months) 38,000
Accounts Payable 19,000
Capital Stock 338,000
Retained Earnings 146,500

From the above information compute:

(1) Current assets: $_______
(2) Current liabilities: $______
(3) The current ratio: ______ to 1
(4) Working capital: $______

(5) Quick ratio: ________to 1

Business   Accounting   
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Answer #1

Answer-1)- Current assets = Cash+ Accounts receivable+ Inventory

= $60000+$82000+$12000

= $154000

2)- Current liabilities = Notes payable+ Accounts payable

= $38000+$19000

= $57000

3)- Current ratio = Current assets/ Current liabilities

= $154000/$57000

= 2.70 to 1

4)- Working capital = Current assets - Current liabilities

= $154000 - $57000

= $97000

5)- Acid-test (Quick ratio)= Current assets-Inventory-Prepaid expenses/Current Liabilities

= ($154000 -$12000 -$0)/$57000

= $142000/$57000

= 2.49 to 1

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