The Current Assets and Current Liabilities for Kolbie Company and Newton

question 21

Essay

The current assets and current liabilities for Kolbie Company and Newton Company are as follows: *These represent prepaid expenses and other non-quick current assets.
a) Determine the quick ratio for both companies. Round to two decimal places.
b) Interpret the quick ratio difference between the two companies.

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Definitions:

Endorsers Discharged

Refers to the situation where endorsers (persons who sign documents, typically negotiable instruments, to endorse them) are released from their obligations under the instrument.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a specified sum of money either on demand or at a specified future date.

Discharged Liability

Refers to a debt or obligation that has been fulfilled, canceled, or extinguished, relieving the debtor of any further responsibility.

Accommodation Party

A party who signs an instrument to provide credit for another party who has also signed the instrument.