Question

when computing days' sales in inventory! Biscuss. P 6-11 A partial balance sheet and in partial balance sheet and income statement for King Corporation follow: KING CORPORATION Partial Balance Sheet Assets December 31, 2011 Current assets: $ 33,493 Cash 215,147 Marketable securities 255,000 Trade receivables, less allowance of $6,000 523,000 Inventories, LIFO 26,180 Prepaid expenses $1,052,820 Total current assets Liabilities Current liabilities: $ 103,689 Trade accounts payable 210,381 Notes payable (primarily to banks) and commercial paper 120,602 Accrued expenses and other liabilities 3,120 Income taxes payable 22,050 Current maturities of long-term debt Total current liabilities $ 459,842 KING CORPORATION Partial Income Statement For Year Ended December 31, 2011 Net sales $3,050,600 Miscellaneous income 45,060 $3,095,660 Costs and expenses: Cost of sales $2,185,100 Selling, general, and administrative expenses 350,265 Interest expense 45,600 Income taxes 300,000 2,880,965 Net income $ 214,695 Note: The trade receivables at December 31, 2010, were $280,000, net of an allowance of $8,000, for a gross receivables figure of $288,000. The inventory at December 31, 2010, was $565,000 (continued)

Answer 1

a)
working capital = Current assets - Current liabilities
= $1,052,820 - $459,842
= $592,978.

b)
Current ratio = Current assets / Current liabilities
= $1,052,820 / $459,842
= 2.2895

c)
Acid test ratio = Quick asset / Current liabilities
= ($1,052,820 - $523,000 - $26,180) / $459,842
= 1.0952

d)
Cash ratio = (cash + marketable securities) / current liabilities
= ($33,493 + $215,147) / $459,842
= 0.5407

NOTE:As per HOMEWORKLIB RULES, only first four sub part question can be answered. Post the rest of the questions separately. Thank you