Computation of current ratio and acid test ratio

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Reference no: EM1314523

Computation of current ratio and acid test ratio.

Scully Corporation's comparative balance sheets are presented below.

SCULLY CORPORATION
Balance Sheets
31-Dec
	2008	2007
Cash	$4,300	$3,700
Accounts receivable	21,200	23,400
Inventory	10,000	7,000
Land	20,000	26,000
Building	70,000	70,000
Accumulated depreciation	-15,000	-10,000
Total	$110,500	$120,100
Accounts Payable	$12,370	$31,100
Common Stock	75,000	69,000
Retained earnings	23,130	20,000
Total	$110,500	$120,100

Scully's 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000.

Instructions

Compute the following ratios for 2008.
a) Current ratio.
b) Acid-test ratio.

Reference no: EM1314523

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