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Compute the acid-test ratio and current ratio

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Reference no: EM131629701

Problem - Frizell Company has the following comparative balance sheet data.

Additional information for 2017:

1. Net income was $25,800.

2. Sales on account were $407,000. Sales returns and allowances were $20,700.

3. Cost of goods sold was $199,400.

FRIZELL COMPANY Balance Sheets December 31

2017

2016

Cash

$ 15,100

$ 29,700

Accounts receivable (net)

70,300

59,000

Inventory

60,900

49,300

Plant assets (net)

195,000

178,500

$341,300

$316,500

Accounts payable

$50,600

$60,900

Mortgage payable (6%)

101,500

101,500

Common stock, $10 par

144,000

118,500

Retained earnings

45,200

35,600

$341,300

$316,500

Compute the following ratios at December 31, 2017.

(a) Current ratio

(b) Acid-test ratio

(c) Accounts receivable turnover

(d) Inventory turnover

Reference no: EM131629701

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