Booker Corporation Had the Following Comparative Current Assets and Current

question 91

Essay

Booker Corporation had the following comparative current assets and current liabilities: $$\begin{array} { l r r } & \text { Dec. } 31,2017 & \text { Dec. 31, 2016 }\\\text { Current assets } \\\text { Cash } & \$ 60,000 & \$ 30,000 \\\text { Short-term investments } & 40,000 & 10,000 \\\text { Accounts receivable } &55,000 & 95,000 \\\text { Inventory } &110,000 & \$ 90,000 \\\text { Prepaid expenses } & 35,000 & \$ 20,000 \\\quad \text { Total current assets } &\$ 300,000 & \$ 245,000 \\\text { Current liabilities } & \\\text { Accounts payable } & \$ 140,000 & \$ 110,000 \\\text { Salaries payable } & 40,000 & 30,000 \\\text { Income tax payable } & 20,000 & 15,000 \\\quad \text { Total current liabilities } &\$200,000&\$155,000 \\\end{array}$$ During 2017 credit sales and cost of goods sold were $750000 and $400000 respectively.
Instructions
Compute the following liquidity measures for 2017:
1. Current ratio.
2. Working capital.
3. Acid-test ratio.
4. Accounts receivable turnover.
5. Inventory turnover.

---

Definitions:

Second Job

Employment taken in addition to one's primary job, often to earn extra income.

Full Time

Employment status in which an individual works the maximum number of legal hours defined by the employer, often with benefits.

Business Profits

The excess of revenues over expenses for a business operation, indicating the financial success of the company.

Income

The money received, usually on a regular basis, for work or through investments, which affects consumer spending and saving decisions.