Guinther & Sons, Inc. Guinther &Sons, Inc.,ja retailer of men\'s clothing, earne
ID: 2331942 • Letter: G
Question
Guinther & Sons, Inc. Guinther &Sons, Inc.,ja retailer of men's clothing, earned a net profit of $77,000 for 2017. The balance sheet for Guinther & Sons includes the following items: $29,000 Accounts receivable 79,000 Prepaid insurance 0,000 Accounts paryable 29,000 Capital stodk 97,000 Long-term notes payable $39,000 3,000 21,000 50,000 43,000 nvenbory Taxes payable Read the information for Guinther & Sons, Inc. Caloulate the current ratio for Guinther & Sons. a. 2.58 to 1 b.2.00 to1 3.00 to 1 to 1Explanation / Answer
Answer is C.
Current Assets = Cash + Inventory + Accounts Receivable + Prepaid Insurance
Current Assets = $29,000 + $79,000 + $39,000 + $3,000
Current Assets = $150,000
Current Liabilities = Taxes Payable + Accounts Payable
Current Liabilities = $29,000 + $21,000
Current Liabilities = $50,000
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $150,000 / $50,000
Current Ratio = 3.00 to 1
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