Homework SourseCalculate the current ratio using the following information
Calculate the current ratio using the following information.
Cash $5,000
Accounts Payable 1,400
Prepaid Rent 900
Land 20,000
Equipment 4,000
Accumulated Depreciation 800
Accounts Payable 3,000
Salaries Payable 800
Notes Payable--long-term 9,000
A. 1,92
B. 1,68
C. 1,55
D .2,43
Solution
SOLUTION:- CURRENT RATIO= current assets/ current liabilities
=5900/3800=1.55
* current assets= cash=5000
prepaid rent=900
total=5900
** current liabilities= salaries payable=800
accounts payable=3000
total=3800
*** it is assumed that accounts payable of 1400 has already been included in the 3000 - accounts payable.
equipment and land are long term assets / non current assets.
accumulated depreciation is neither a assets nor a liability.
