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11 September, 18:20

A partial list shows that Charles Corporation's adjusted trial balance included the following items (all account balances are normal) : Accounts payable $36,500, Accounts receivable $46,500, Capital stock $100,000, Cash $46,000, Dividends $10,000, Goodwill $47,000, Interest expense $4,000, Interest payable $3,500, Inventory $32,000, Note payable $30,000, Prepaid expenses $4,400, Property, plant & equipment $123,000, Retained earnings $46,000, Rent expense $18,000, Revenues $101,000, and Salary expense $60,000. The note payable balance is due in nine months. How much is Charlie's current ratio? (Round your answer to two decimal places.)

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  1. 11 September, 18:39
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    The charlie current ratio is 1.84 times

    Explanation:

    The formula to compute the current ratio is shown below:

    Current Ratio = Current Assets : Current liabilities

    where,

    Current assets = Account receivable + cash + inventory + prepaid expense

    = $46,500 + $46,000 + $32,000 + $4,400

    = $128,900

    And, the current liabilities = Accounts payable + interest payable + short notes payable

    = $36,500 + $3,500 + $30,000

    = $70,000

    Now put these values to the above formula

    So, the value would equal to

    = $128,900 : $70,000

    = 1.84 times
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