Data from Dunshee Corporation's most recent balance sheet appear below:
$\begin{array}{lrr}
&\text { Year 2 } & \text { Year 1 } \\text { Current assets: }\
\text { Cash}&\$ 130 & \$ 100 \
\text { Accounts receivable, net.}&270 & 290 \
\text {Inventory }&90 & 110 \
\text {Prepaid expenses }&10 & 10\
\text { Total current assets. }&\$500&\$510\
\text { Total current liabilities }&\$230&\$220
\end{array}$ Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730.
-The current ratio at the end of Year 2 is closest to:
A) 0.38
B) 2.17
C) 0.94
D) 0.40

Question

Data from Dunshee Corporation's most recent balance sheet appear below:
 $\begin{array}{lrr}
&\text { Year 2 } & \text { Year 1 } \\text { Current assets: }\
\text { Cash}&\$ 130 & \$ 100 \
\text { Accounts receivable, net.}&270 & 290 \
\text {Inventory }&90 & 110 \
\text {Prepaid expenses }&10 & 10\
\text { Total current assets. }&\$500&\$510\
\text { Total current liabilities }&\$230&\$220
\end{array}$ Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730.
-The current ratio at the end of Year 2 is closest to:
A) 0.38
B) 2.17
C) 0.94
D) 0.40

Quizplus · Accepted Answer

The current ratio is calculated by dividing total current assets by total current liabilities. For Year 2, this is $500 / $230 = 2.17.

Data from Dunshee Corporation's Most Recent Balance Sheet Appear Below