imon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 31,800...

imon Company’s year-end balance sheets follow.

At December 31	2017		2016		2015
Assets
Cash	$	31,800	$	35,625	$	37,800
Accounts receivable, net		89,500		62,500		50,200
Merchandise inventory		112,500		82,500		54,000
Prepaid expenses		10,700		9,375		5,000
Plant assets, net		278,500		255,000		230,500
Total assets	$	523,000	$	445,000	$	377,500
Liabilities and Equity
Accounts payable	$	129,900	$	75,250	$	51,250
Long-term notes payable secured by mortgages on plant assets		98,500		101,500		83,500
Common stock, $10 par value		163,500		163,500		163,500
Retained earnings		131,100		104,750		79,250
Total liabilities and equity	$	523,000	$	445,000	$	377,500

1. Compute the current ratio for the year ended 2017, 2016, and 2015.
2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015.

Solutions

Expert Solution

1	Current ratio=Current asset/Current liabilities
		2017	2016	2015
	Current assets	244500	190000	147000
	Current liabilities	129900	75250	51250
	Current ratio	1.88	2.52	2.87

2	Acid-test ratio=(Current assets-Inventories)/Current liabilities
		2017	2016	2015
	Current assets	244500	190000	147000
	Less: inventories	112500	82500	54000
		132000	107500	93000
	Current liabilities	129900	75250	51250
	Acid-test ratio	1.02	1.43	1.81

	Note: 1- Current assets
		2017	2016	2015
	Cash	31800	35625	37800
	Accounts receivable,Net	89500	62500	50200
	Merchandise inventory	112500	82500	54000
	Prepaid expenses	10700	9375	5000
	Total current assets	244500	190000	147000

	Note:2- current Liabilities
		2017	2016	2015
	Accounts payable	129900	75250	51250
	Total current liabilities	129900	75250	51250

ekkarill92 answered 7 months ago

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