The following is a December 31, 2018, post-closing trial balance for Culver City
ID: 2330149 • Letter: T
Question
The following is a December 31, 2018, post-closing trial balance for Culver City Lighting, Inc. Debits Credits Account Title Cash Accounts receivable Inventories Prepaid insurance Equipment Accumulated depreciation-equipment Patent, net Accounts payable Interest payable Note payable (due in 10, equal annual installments) Common stock Retained earnings Totals $ 62,000 46,000 52,000 22,000 100,e00 41,000 47,900 15,500 5, 500 130,000 77,000 60,000 $329,000 $329,000 a. Calculate the current ratio. b. Calculate the acid-test ratio. c. Calculate the debt to equity ratio. Current Ratio Numerator Denominator Acid-Test Ratio Numerator DenominatorExplanation / Answer
Current Ratio
Numerator
Current Assets
=
$ 182,000.00
=
8.67
Denominator
Current Liabilities
$ 21,000.00
times
Acid Test Ratio
Numerator
Quick assets
=
$ 108,000.00
=
5.14
Denominator
Current Liabilities
$ 21,000.00
times
Debt to Equity Ratio
Numerator
Debt
=
$ 151,000.00
=
1.10
Denominator
Equity
$ 137,000.00
times
Debt includes all liabilities including short term
Working Notes are part of Answer
Current assets
Cash
$ 62,000.00
Accounts receivables
$ 46,000.00
Inventories
$ 52,000.00
Prepaid Insurance
$ 22,000.00
Total Current Assets
$ 182,000.00
Current Libilities
Accounts Payables
$ 15,500.00
Interest Payables
$ 5,500.00
Total Current Liabilities
$ 21,000.00
Quick Assets
Cash
$ 62,000.00
Accounts receivables
$ 46,000.00
Total Quick Assets
$ 108,000.00
Debts
Total Current Liabilities
$ 21,000.00
Notes Payable
$ 130,000.00
Total Debts
$ 151,000.00
Equity
Common Stock
$ 77,000.00
Retained Earnings
$ 60,000.00
Total Equity
$ 137,000.00
Current Ratio
Numerator
Current Assets
=
$ 182,000.00
=
8.67
Denominator
Current Liabilities
$ 21,000.00
times
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