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27. Use the following data to calculate the current ratio. Eddy Auto Supplies Balance Sheet December...

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
A.

2.34 : 1
B.

2.80 : 1
C.

3.31 : 1
D.

1.26 : 1

54. All of the following statements are true regarding the periodic inventory system except

A.

Under the periodic inventory system, the balance of cost of goods sold is calculated at the end of the period.
B.

Under the periodic inventory system, the balance in ending inventory is calculated at the end of the period.
C.

Using the periodic inventory system affects the balance sheet contents differently than when the perpetual system is used.
D.

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

A.

$1,456
B.

$1,508
C.

$1,848
D.

$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?

A.

$37,864.40
B.

$42,697.60
C.

$38,000.00
D.

It cannot be determined.

Solutions

Expert Solution

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

ekkarill92 answered 1 year ago
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