27. Use the following data to calculate the current ratio. Eddy Auto Supplies Ba
ID: 2536264 • Letter: 2
Question
27. Use the following data to calculate the current ratio.
Eddy Auto Supplies
Balance Sheet
December 31, 2017
Cash
$ 126,000
Accounts payable
$ 165,000
Accounts receivable
120,000
Salaries and wages payable
30,000
Inventory
210,000
Prepaid insurance
90,000
Mortgage payable
270,000
Stock investments
255,000
Total liabilities
$465,000
Land
285,000
Buildings
$339,000
Common stock
$360,000
Less: Accumulated Depreciation
(60,000)
279,000
Retained earnings
750,000
Trademarks
210,000
Total stockholders’ equity
$1,110,000
Total assets
$1,575,000
Total liabilities and and stockholders’ equity
$1,575,000
2.34 : 1
2.80 : 1
3.31 : 1
1.26 : 1
54. All of the following statements are true regarding the periodic inventory system except
Under the periodic inventory system, the balance of cost of goods sold is calculated at the end of the period.
Under the periodic inventory system, the balance in ending inventory is calculated at the end of the period.
Using the periodic inventory system affects the balance sheet contents differently than when the perpetual system is used.
Under the periodic system, a company uses separate accounts to record freight costs, returns, and discounts.
60. Alpha First Company just began business and made the following four inventory purchases in June:
June 1 150 units $ 1,040
June 10 200 units 1,560
June 15 200 units 1,680
June 28 150 units 1,320
$5,600
A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is
$1,456
$1,508
$1,848
$1,824
73. Dominic's Salon has total receipts for the month of $40,280 including sales taxes. If the sales tax rate is 6%, what are Dominic's sales for the month?
$37,864.40
$42,697.60
$38,000.00
It cannot be determined.
Eddy Auto Supplies
Balance Sheet
December 31, 2017
Cash
$ 126,000
Accounts payable
$ 165,000
Accounts receivable
120,000
Salaries and wages payable
30,000
Inventory
210,000
Prepaid insurance
90,000
Mortgage payable
270,000
Stock investments
255,000
Total liabilities
$465,000
Land
285,000
Buildings
$339,000
Common stock
$360,000
Less: Accumulated Depreciation
(60,000)
279,000
Retained earnings
750,000
Trademarks
210,000
Total stockholders’ equity
$1,110,000
Total assets
$1,575,000
Total liabilities and and stockholders’ equity
$1,575,000
Explanation / Answer
Question 27, Answer B – 2.8 : 1
Current Ratio = Total Current Assets / Total Current Liabilities
Total Current Assets = $126000 + 120000 + 210000 + 90000 = $5,46,000
Total Current Liabilities = $165000 + 30000 + = $1,95,000
Current Ratio = $5,46,000 / $1,95,000
= 2.8
= 2.8 : 1
Question 54, Answer C
Answer – “ Using the periodic inventory system affects the balance sheet contents differently than when the perpetual system is used.”
Question 60, Answer B -$1,508
The value of the ending inventory on June 30
= $1,040 + [($1,560 /200) x (210 - 150)]
= $1,508
Question 73, Answer C -$38,000
Total receipts for the month Including sales Tax = $40,280
Dominic's sales for the month = $40,280 /1.05 = $38,000
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