Question

Peace Corporation Comparative Balance Sheet December 31, 2017 and 2016 2017 2016 Assets Current Assets: Cash and Cash Equivalents Accounts Receivable Merchandise Inventory Prepaid Expenses Total Current Assets s 2.284 2,044 1,340 1,125 1,697 7,365 1,920 1,870 2,078 6,993 18,313 15,126 $ 25,678 $ 22,119 Other Assets Total Assets Liabilities Current Liabilities Long-term Liabilities Total Liabilities 7,113 8,342 2,186 11,773 10,528 4,660 Stockholders' Equity Common Stock, no par Retained Eamings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 5,691 5,900 11,591 $ 25,678 $ 22,119 7.105 6,800 13,905 Peace Corporation Income Statement Year Ended December 31, 2017 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income Interest Expense Income Before Income Taxes Income Tax Expense Net Inenme $ 29,355 4,932 24,423 6,502 17,921 201 17.720 2,831 $ 14,889

Answer 1

Acid test ration = cash and cash equivalents + marketable securities + accounts receivable / current liabilities

Note that inventory and prepaid expenses are not included in its calculation. Accordingly,

2280+2044/7113 = 0.609

Hence option A is correct answer