Swanson Company has a current ratio of 2.1 and the following assets on December 31, 2017: $\begin{array}{lr}
\text { Cash } & \$ 98,500 \
\text { Accounts receivable, net } & 499,700 \
\text { Inventory } & 960,000 \
\text { Prepaid expenses } & 23,100 \
\text { Equipment, net } & \underline{2,284,800} \
\text { Total assets } & \$ 3,866,100
\end{array}$ How much are the company's current liabilities on December 31, 2017?
A)$285,000
B)$742,000
C)$753,000
D)$1,841,000

Question

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. The current assets are cash, accounts receivable, inventory, and prepaid expenses, totaling $1,581,300. With a current ratio of 2.1, the current liabilities are $1,581,300 / 2.1 = $753,000.

Swanson Company Has a Current Ratio of 2 How Much Are the Company's Current Liabilities on December 31