Excerpts from Colter Corporation's most recent balance sheet appear below: Year 2 Year 1 Current assets:...

Question

Question

Excerpts from Colter Corporation's most recent balance sheet appear below: Year 2 Year 1 Current assets:...

Excerpts from Colter Corporation's most recent balance sheet appear below:

	Year 2		Year 1
Current assets:
Cash	$	107	$	137
Accounts receivable, net		134		144
Inventory		221		211
Prepaid expenses		57		57
Total current assets		519		549
Total current liabilities	$	388	$	375

Sales on account in Year 2 amounted to $1,635 and the cost of goods sold was $975.

The acid-test (quick) ratio at the end of Year 2 is closest to:

1.00
0.77
0.62
1.34

business accounting

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Answer 1

Answer #1

Quick ratio=(Current assets-inventory-prepaid expenses)/Current liabilities

=(519-221-57)/388

which is equal to

=0.62(Approx).

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Answer 2

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