The financial statements for Silver Service Company include the following items: 2019 2018 Cash $50,500 $42,000 Short-term Investments 26,000 14,500 Net Accounts Receivable 52,000 48,000 Merchandise Inventory 131,000 51,000 Total Assets 532,000 548,000 Accounts Payable 132,500 127,000 Salaries Payable 16,000 16,000 Long-term Note Payable 57,000 57,000 Compute the acid-test ratio for 2018.

Question

Ethan Rush

Business

16 August, 10:52

The financial statements for Silver Service Company include the following items: 2019 2018 Cash $50,500 $42,000 Short-term Investments 26,000 14,500 Net Accounts Receivable 52,000 48,000 Merchandise Inventory 131,000 51,000 Total Assets 532,000 548,000 Accounts Payable 132,500 127,000 Salaries Payable 16,000 16,000 Long-term Note Payable 57,000 57,000 Compute the acid-test ratio for 2018.

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Answers (1)

Know the Answer?

Nina Carlson · Answer 1

0.73 times

Explanation:

The computation of the acid test ratio for 2018 is shown below:

Acid-test ratio = Quick assets : total current liabilities

where,

Quick assets = Cash + short-term investments + Accounts receivable (net)

= $42,000 + $14,500 + $48,000

= $104,500

And, the current liabilities would be

= Accounts Payable + Salaries payable

= $127,000 + $16,000

= $143,000

Now put these values to the above formula

So, the value would equal to

= $104,500 : $143,000

= 0.73 times