After becoming thoroughly frustrated by engineering econ, you have decided to qu

Question

After becoming thoroughly frustrated by engineering econ, you have decided to quit engineering and start a pet spa. Your first balance sheet is shown below Assets Current assets Liabilities Current liabilities $1,360 $5,000 $1,000 Cash Inventory (1) Accounts payable 1300 Accrued expenses Total current assets $5,915 Total curent liabilities Fixed assets Equity $13.375 Stock Equipment Less: Accumulated depreciation(5.400 Retained earmings $15,495 Total liabilities and equity Total assets a) b) What are the values for cash (1), accrued expenses (2), retained earnings (3), and total liabilities and equity (4)? What are your current ratio, working capital, and acid-test ratio?

Explanation / Answer

total current assets = 5915

inventory =1300

so cash =5915-1300=4615

total current liability=5000

accounts payable=1360

accured expenses=5000-1300=3640

total assets =total liabilities and equity

so  

total liabilities and equity =15495

retained earnings=15495-5000-1000=9495

current ratio=current assets/current liabilities

5915/5000=1.183

working capital= current assets -curent liabilities=5915-5000=915

acid test ratio=(current assets-inventory)/current liabilities

(5915-1300)/5000=.923

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