Excerpts from Colter Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The current ratio at the end of Year 2 is closest to:
A)0.32
B)0.38
C)1.25
D)1.20

Question

Excerpts from Colter Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The current ratio at the end of Year 2 is closest to:
A)0.32 
B)0.38 
C)1.25 
D)1.20

Quizplus · Accepted Answer

To calculate the current ratio, we need to divide the total current assets by the total current liabilities. 
From the balance sheet, we can see that:
Total current assets = $4,890 
Total current liabilities = $3,912

So, the current ratio = $4,890 / $3,912 = 1.25

Therefore, the closest answer choice is C) 1.25.

Excerpts from Colter Corporation's Most Recent Balance Sheet Appear Below