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Use the following data to calculate the current ratio. Nash's Trading Post, LLC Balance Sheet December...

Use the following data to calculate the current ratio. Nash's Trading Post, LLC Balance Sheet December 31, 2017 Cash $65000 Accounts payable $125000 Accounts receivable 85000 Salaries and wages payable 10000 Inventory 135000 Mortgage payable 150000 Prepaid insurance 75000 Total liabilities $285000 Stock Investments 175000 Land 185000 Buildings $200000 Common stock $210000 Less: Accumulated depreciation (50000) 150000 Retained earnings 475000 Trademarks 100000 Total stockholders' equity $685000 Total assets $970000 Total liabilities and stockholders' equity $970000

a. 2 : 1

b.2 : 1

c. 3 : 1

d. 2.67 : 1

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Answer #1

Ans. Option 4th 2.67 : 1

*Working Notes:

*Calculation of total current assets:

Cash. $65,000

Accounts receivable. $85,000

Inventory. $135,000

Prepaid insurance. $75,000

Total current assets. $360,000

*Calculation of total current liabilities:

Accounts payable. $125,000

Salaries and wages payable. $10,000

Total current liabilities. $135,000

*Calculation of current ratio:

Current ratio = Total current assets / Total current liabilities

= $360,000 / $135,000

= 2.67 : 1

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