A Corporation Reports the Following Year-End Balance Sheet Data Calculate the Corporation's Current Ratio and Its Acid-Test Ratio

question 8

Essay

A corporation reports the following year-end balance sheet data:
$$\begin{array} { | l | r | l | r | } \hline \text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 64,000 \\\hline \text { Accounts receivable } & 35,000 & \text { Long-term liabilities } & 72,000 \\\hline \text { Inventory } & 60,000 & \text { Common stock } & 100,000 \\\hline \text { Equipment } & 150,000 & \text { Retaired earnings } & 49,000 \\\hline \text { Total assets } & \$ 285,000 & \text { Total liabilities and equity } & \$ 285,000 \\\hline\end{array}$$
Calculate the corporation's current ratio and its acid-test ratio.

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Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods in process costing environments, treating them as if they were whole units.

Process Costing

An accounting method used to allocate costs to units of product in continuous, homogeneous production processes.

Department A

A specific segment or division within an organization that focuses on a particular set of tasks or responsibilities.

Equivalent Units

A concept in cost accounting used to equate units of production in various stages of completion to a number of fully completed units.