Before Adjusting Its Current Investments in Equity Securities, Caldwell Company

question 5

Multiple Choice

Before adjusting its current investments in equity securities, Caldwell Company has total current assets and current liabilities of $45,000 and $15,000, respectively. During the current year, Caldwell has net income of $243,750 with 75,000 shares of common stock outstanding. This amount excludes the effects of yearend adjustments related to the investments. Included in current assets are equity securities recorded at their original cost of $13,000. However, the current market value of those securities is $4,000 at yearend. If Caldwell properly accounts for equity securities, what is Caldwell's current ratio before and after the investment adjustment?

• A)3.0 and 2.1
• B)3.0 and 3.3
• C)3.0 and 3.6
• D)3.0 and 2.4

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Influencers

Individuals who have the power to affect the purchasing decisions of others due to their authority, knowledge, position, or relationship.

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