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For the FY 2018, Dorchester Company's balance sheet included the following current items: cash $49,000, accounts...

For the FY 2018, Dorchester Company's balance sheet included the following current items: cash $49,000, accounts receivable $100,000, inventories $109,000, prepaid expenses $18,000, accounts payable $60,000, and accrued expenses $52,000. Use this information to determine the Current Ratio. (Round & enter your answers to one decimal place.)

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Answer #1

Accrued expenses can be considered as current liabilities, usually due within one year.

Prepaid expenses are future expenses that paid in advance, usually prepaid expenses are current assets as these used within one year.

Current assets Total are as below.

Current Liabilities are as below.

Formula for Current ratio

Current ratio = Current Assets/Current Liabilities

Current Ratio = 2.46 ($276,000/$112,000)

Current Ratio = 2.46

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