Determine the acid-test ratio

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Reference no: EM132488649

Question - The following data are provided:

 

December 31

 

2018

2017

Cash

$1450000

$1005000

Accounts receivable (net)

1800000

1150000

Inventories

2550000

2300000

Plant assets (net)

6500000

6450000

Accounts payable

1150000

800000

Income taxes payable

180000

100000

Bonds payable

1400000

1400000

10% Preferred stock, $50 par

2000000

2000000

Common stock, $10 par

2450000

1850000

Paid-in capital in excess of par

1650000

1300000

Retained earnings

3850000

3600000

Net credit sales

12850000

Cost of goods sold

8500000

Operating expenses

3100000

Net income

1450000

Additional information: Depreciation included in cost of goods sold and operating expenses is $1230000. On May 1, 2018, 60000 shares of common stock were issued. The preferred stock is cumulative. The preferred dividends were not declared during 2018.

Required - At December 31, 2018, determine the acid-test ratio?

Reference no: EM132488649

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