Based on the information in Table 4 1, the current ratio is
a. 2.89.
b. 1.21.
c. 1.96.
d. 1.05.
Table 4 2
Johnson Company
Balance Sheet
|
Assets: |
|
|
Cash and marketable securities |
$300,000 |
|
Accounts receivable |
1,215,000 |
|
Inventories |
1,747,500 |
|
Prepaid expenses |
24,000 |
|
Total current assets |
3,286,500 |
|
Fixed assets |
2,700,000 |
|
Less: accum. depr. |
(1,087,500) |
|
Net fixed assets |
1,612,500 |
|
Total assets |
$4,899,000 |
|
Liabilities: |
|
|
Accounts payable |
$240,000 |
|
Notes payable |
825,000 |
|
Accrued taxes |
42,000 |
|
Total current liabilities |
$1,107,000 |
|
Long term debt |
975,000 |
|
Common Stock (100,000 shares) |
100,000 |
|
Retained Earnings |
2,717,000 |
|
Total liabilities and owner’s equity |
$4,899,000 |
|
Net sales (all credit) |
$6,375,000 |
|
Less: Cost of goods sold |
(4,312,500) |
|
Selling and administrative expense |
(1,387,500) |
|
Depreciation expense |
(135,000) |
|
Interest expense |
(127,000) |
|
Earnings before taxes |
$412,500 |
|
Income taxes |
(225,000) |
|
Net income |
$ 187,500 |
|
Common stock dividends |
$97,500 |
|
Change in retained earnings |
$90,000 |