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29 October, 06:39

Heart of Tennessee Telecom has these account balances at December 31, 2016 :

Note payable, long-term ... $7800

Prepaid rent ... 2300

Salary payable ... 3000

Service revenue ... 29,400

Supplies ... 500

Accounts payable ... $3700

Accounts receivable ... 5700

Cash ... 3500

Depreciation expense ... 6000

Equipment ... 15,000

Requirements

a. Calculate Heart of Tennessee Telecom's current ratio.

b. How much in current assets does Heart of Tennessee Telecom have for every dollar of current liabilities that it owes?

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Answers (1)
  1. 29 October, 07:07
    0
    a. Current ratio = current assets / current liability

    = current assets = 2,300+5,700+3,500 = 11,500

    Current liability = 3,000+3700 = 6,700

    Current ratio = 11,500/3700

    = 1.72

    b. How much in current assets does Heart of Tennessee Telecom have for every dollar of current liabilities that it owes?

    It has $1.72
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