Moore Company has the following partial list of account balances at year-end: Account payable $1,500 Accounts...
Moore Company has the following partial list of account balances at year-end:
Account payable $1,500
Accounts receivable 4,600
Cost of good sold 3,200
Cash 23,000
Taxes payable 10,000
Land 25,000
Notes payable( Due in6 months) 1.000
Salaries payable 900
Inventory 4,300
Requirements :
A.compute the quick ratio
B.Determine the amount of work capital
C. Assuming that cash is used pay the balance due on accounts payable
1.new compute the quick ratio
2.compute the new amount of work capital
D. Compute the accounts payable turnover ratio(use year end amounts)
Homework Answers
Answer A:
Quick assets = Cash and cash equivalents + Marketable securities + Accounts receivable
= 23000 + 0 + 4600
=$27,600
Current liabilities = Account payable + Taxes payable + Notes payable (Short - term) + Salaries payable
= 1500 + 10000 + 1000 + 900
= $13,400
Quick ratio = Quick assets / Current liabilities = 27600 / 13400 = 2.06
Quick ratio = 2.06
Answer B:
Current assets = 4600 + 23000 + 4300 = $31,900
Working capital = Current assets - Current liabilities = 31900 - 13400 = $18,500
Working capital = $18,500
Answer C (1):
Assuming that cash is used pay the balance due on accounts payable:
Cash balance = 23000 - 1500 = $21,500
New Quick assets = 21500 + 4600 = $26,100
New current liabilities =10000 + 1000 + 900 = $11,900
New quick ratio = 26100 / 11900 = 2.19
New quick ratio = 2.19
Answer C (2):
New current assets = 4600 + 21500 + 4300 = $30,400
New amount of work capital = 30400 - 11900 = $18,500
New amount of Working capital = $18,500
Answer C (3):
Accounts payable Turnover ratio = Cost of goods sold / Year end accounts payable = 3200 / 1500 = 2.13333
Accounts payable Turnover ratio = 2.13
Add Answer to:
Moore Company has the following partial list of account balances
at year-end:
Account payable $1,500
Accounts...
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