Check m Exercise 3-19 Calculating ratios; solve for unknowns [LO3-8] The current
ID: 2333454 • Letter: C
Question
Check m Exercise 3-19 Calculating ratios; solve for unknowns [LO3-8] The current asset section of Guardian Consultant's balance sheet consists of cash, accounts receivable, and prepaid expenses. The 2018 balance sheet reported the following: cash, $1,370,000; prepaid expenses, $430,000; noncurrent assets, $3,100,000 and shareholders' equity, $3,200,000. The current ratio at the end of the year was 30 and the debt to equity ratio was 16. Required Determine the following 2018 amounts and ratios: (Round your "The acid-test ratio" answer to 1 decimal place.) Current liablities 2. Long-term labinies 4. The acid-1est ratio | FAwMTH15301 12)aex- a. -.-- The Ten Command., doe- docx d' Student,Registrati tion..-pafExplanation / Answer
Debt to equity ratio Total Debt/Equity Total Debt $ 3,200,000*1.6 Total Debt $5,120,000 Debt+ Equity 5120000 +3200000 Debt+ Equity $8,320,000 Debt +Equity = Current Assets + Non Current Assets Account Receivable Debt +Equity - Cash-prepaid Expenses - Non Current Assest Account Receivable 8320000 - 1370000-430000-3100000 Account Receivable $3,420,000 Current Assets Cash +Prepaid expenses + Account receivable Current Assets 1370000+430000+3420000 Current Assets $5,220,000 Current Ratio Current Assets/Current liabilities Current liabilities 5220000/3 Current liabilities 1,740,000 Long Term Debt Total Debt -Current Liabilities Long Term Debt 5120000 - 1740000 Long Term Debt $3,380,000 Acid test Ratio Liquid Assets /Current liabilites Liquid Assets Current Assets - Inventories - Prepaid Expenses Liquid Assets 5220000 -430000 Liquid Assets 4790000 Acid test Ratio 4790000/1740000 Acid test Ratio 2.8 1 Current liabilities $1,740,000 2 Long Term Debt $3,380,000 3 Account Receivable $3,420,000 4 Acid test Ratio 2.8