Question

3. Jumpstart Corp had the following comparative current assets and current liabilities for 2015 & 2014: Dec. 31, 2015 Dec.31, 2014 Current assets Cash ....... $ 30,000 $ 30,000 Marketable securities ........ 40,000 10,000 Accounts receivable (net) ... 55,000 95,000 Inventory ........ 110,000 90,000 Prepaid expenses ............ 35,000 20,000 Total current assets .......... $270,000 $ 245,000 Current liabilities Accounts payable ...... $ 120,000 $ 110,000 Salaries payable 40,000 30,000 Income taxes payable ....... 20,000 15,000 Total current liabilities ...... $ 180,000 $ 155,000 During 2015, credit sales and cost of goods sold were $450,000 and $250,000 respectively Instructions Compute the following for 2015 1. Current ratio (1 pt.) 2. Working capital (1 pt.) 3. Quick ratio (1 pts.) 4. Days' sales uncollected (2 pts.) 5. Days' inventory on hand (2 pts.) 6. Days' payable (3 pts.)

Answer 1

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Jumpstart Corp				Answer 1	2015
Income Statement	2015	2014		Current Ratio	1.50
Credit Sales	450,000.00			Current Assets/Current Liabilities
Cost of goods sold	250,000.00
				Answer 2
Current Assets	2015	2014		Working capital	90,000.00
Cash	30,000.00	30,000.00		Current Assets- Current Liabilities
Marketable Securities	40,000.00	10,000.00
Accounts Receivable	55,000.00	95,000.00		Answer 3
Inventory	110,000.00	90,000.00		Acid Test Ratio	0.69
Prepaid Expenses	35,000.00	20,000.00		Quick Assets/Current Liabilities
Total Current Assets	270,000.00	245,000.00
				Answer 4
Current Liabilities	2015	2014		Days sales uncollected	60.83
Accounts payable	120,000.00	110,000.00		Average Receivable/ Net Sales* 365
Salaries payable	40,000.00	30,000.00
Income Taxes payable	20,000.00	15,000.00		Answer 5
Total Current Liabilities	180,000.00	155,000.00		Days Inventory on hand	146.00
				Average Inventory/ Cost of goods sold* 365
Total Current Assets	270,000.00	245,000.00
Less:				Answer 6
Inventory	110,000.00	90,000.00		Days Payable	167.90
Prepaid Expense	35,000.00	20,000.00		Average Payable/ Cost of goods sold* 365
Quick Assets	125,000.00	135,000.00
	2015	2014
Accounts Receivable (net)	55,000.00	95,000.00
Average Receivable (net)	75,000.00
Inventory	110,000.00	90,000.00
Average Inventory	100,000.00
Accounts Payable (net)	120,000.00	110,000.00
Average Payable (net)	115,000.00