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The financial statements for Barrington Service Company include the following​ items: 2019 2018 Cash ​ $43,500 ​ $47,000 Shortminusterm Investments ​ 31,000 ​16,000 Net Accounts Receivable ​62,000 ​56,000 Merchandise Inventory ​165,000 ​51,000 Total Assets ​525,000 ​544,000 Accounts Payable ​126,500 ​130,000 Salaries Payable ​24,000 ​16,000 Longminusterm Note Payable ​ 61,000 ​51,000 Compute the current ratio for 2018.​

Respuesta :

Answer:

The Current ratio is 1.16

Explanation:

The formula to compute the current ratio is:

Current ratio = Current Assets (CA) / Current Liabilities(CL)

where

CA is computed as:

CA = Cash + Short term investment + Net Accounts Receivable + Merchandise Inventory

= $ 47,000 + $16,000 + $56,000 + $51,000

= $170,000

CL is computed as:

CL = Accounts Payable + Salary Payable

= $130,000 + $16,000

= $146,000

Putting the values in the formula:

= $170,000 / $146,000

= 1.16

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