Page 205 - Calculating Agriculture Cover 20191124 STUDENT - A

CH 21] Calculating Agriculture 21-21

Name: ________________

7. This data was taken from the balance sheet of Autry Enterprises: cash, $64,000;
marketable securities, $54,000; accounts receivable, $105,000; merchandise inventory,
$290,000; notes payable, $125,000; accounts payable, $48,000. Find the (a) current
ratio and (b) acid-test ratio. Where applicable, round to the nearest tenth.

Solution algorithm:

Current Assets
Cash $64,000
Accounts Receivable $105,000
Merchandise Inventory $290,000
Marketable Securities $54,000
Total Current Assets $513,000

Liabilities
Current
Accounts Payable $48,000
Working
Notes Payable $125,000 21
Total Liabilities $173,000

(a) Current Ratio = Current Assets = $ 513,000 = 10.7:1
Current Liabilities $ 48,000

(b) Acid-Test Ratio = Cash + Accounts Receivable + Stock Investment
Current Liabilities

Acid-Test Ratio = 64,000 + 105,000 + $290,000 = $459,000 = 9.6 : 1
$ 48,000 $48,000

8. This data was taken from the balance sheet of Carmona Enterprises: cash, $57,000;
marketable securities, $35,000; accounts receivable, $84,000; inventory, $215,000;
notes payable, $65,000; accounts payable, $90,000. Find the (a) current ratio and (b)
acid-test ratio. Where applicable, round to the nearest tenth.

Solution algorithm:

Current Assets
Cash $57,000
Accounts Receivable $84,000
Inventory $215,000
Total Current Assets $356,000

Liabilities
Current
Accounts Payable $90,000
Working
Notes Payable $65,000
Total Liabilities $155,000

(a) Current Ratio = Current Assets = $ 356,000 = 3.96:1
Current Liabilities $ 90,000

(b) Acid-Test Ratio = Cash + Accounts Receivable + Inventory Investment
Current Liabilities

Acid-Test Ratio = 57,000 + 84,000 + $180,000 = $321,000 = 3.57 : 1
$ 90,000 $90,000

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