Question

The financial statements for Silver Service Company include the following​ items: 2019 2018 Cash ​ $50,500 ​ $42,000 ​Short-term Investments ​26,000 ​14,500 Net Accounts Receivable ​52,000 ​48,000 Merchandise Inventory ​131,000 ​51,000 Total Assets ​532,000 ​548,000 Accounts Payable ​132,500 ​127,000 Salaries Payable ​16,000 ​ 16,000 ​Long-term Note Payable ​57,000 ​57,000 Compute the​ acid-test ratio for 2018.

Answer 1

0.73 times

Step-by-step explanation:

The computation of the acid test ratio for 2018 is shown below:

Acid-test ratio = Quick assets ÷ total current liabilities

where,

Quick assets = Cash + short-term investments + Accounts receivable (net)

= $42,000 + $14,500 + $48,000

= $104,500

And, the current liabilities would be

= Accounts Payable + Salaries payable

= $127,000 + $16,000

= $143,000

Now put these values to the above formula

So, the value would equal to

= $104,500 ÷ $143,000

= 0.73 times