Homework Answers
| Accounts receivable | $ 44,000 |
| Merchandise inventory | $ 60,000 |
| Total current assets | $ 1,20,000 |
| Accounts payable | $ 30,000 |
| Wages payable | $ 10,000 |
| Total current liabilities | $ 40,000 |
a.
| Working capital = Current assets - Current liabilities |
| Working capital = $120,000 - $40,000 = $80,000 |
b.
| Current ratio = Current assets / Current liabilities |
| Current ratio = ($120,000 / $40,000) |
| Current ratio = 3 |
c.
| Acid test ratio = (Current assets - Inventory) / Current liabilities |
| Acid test ratio = ($120,000 - $60,000) / $40,000 |
| Acid test ratio = 1.5 |
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