ezto.mheducation.com Selected amounts from Reingold Company\'s balance sheet fro

Question

ezto.mheducation.com Selected amounts from Reingold Company's balance sheet from the beginning of the year follow: 75,000 14,500 362,000 473,000 Prepaid expenses Pant and equipment, n 150.000 s 145,000 Bonds pyable in During the year, the company completed the following transactions: x Purchased inventory on account, $53,750 a Declared a cash dividend, $35,000. b. Paid accounts payable, $108,000. e Collected cash on accounts receivable, $85,500 d Purchased equipment for cash, $79,000. Paid a cash dividend previously declared, $35,000 t Borrowed cash on a short-term note with the bank, $67,500 Sold inventory costing $74,000 for $105,000, on account. Wrote off uncollectible accounts in the amount of $12,000 reducing the accounts receivable balance accordingly. Sold marketable securities costing $14,500 for cash, $11,000 Issued additional shares of common stock for cash, $210,000. Paid off all short-term notes due, $177,500 Required Compute the following amounts and ratios as of the beginning of the year Working capital b. Current ratio. (Round your answer to 2 decimal places.) e. Acid-test ratio. (Round your answer to 2 decimal places.)

Explanation / Answer

Working capital = Current assets - Current liabilities Current assets = 75000+14500+362000+473000+11500 = $936000 Current liabilities = 209000+64500+110000 = $383500 Working capital = 936000-383500 = $552500 Current Ratio = Current assets / Current liabilities Current assets = 75000+14500+362000+473000+11500 = $936000 Current liabilities = 209000+64500+110000 = $383500 Current Ratio = 936000/383500 = 2.44 Acid Test ratio = Quick assets / current liabilities Quick assets = Current assets - inventories-prepaid exp = 936000-473000-11500 = $451500 Current liabilities = 209000+64500+110000 = $383500 Acid Test ratio = $451500/$383500 = 1.18

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.