Before adjusting its current passive investments in equity securities, Apex Company has total current assets and current liabilities of $23,000 and $12,000, respectively. During the current year, Apex has net income of $200,000 with 50,000 shares of common stock outstanding. This amount excludes the effects of yearend adjustments related to the investments. Included in current assets are equity securities recorded at their original cost of $3,000. However, the current market value of those securities is $4,000 at yearend. If Apex properly accounts for the securities, determine the effect on Apex's current ratio and earnings per share.

Question

Quizplus · Accepted Answer

The Answer of Before adjusting its current passive investments in equity securities, Apex Company has total current assets and current liabilities of $23,000 and $12,000, respectively. During the current year, Apex has net income of $200,000 with 50,000 shares of common stock outstanding. This amount excludes the effects of yearend adjustments related to the investments. Included in current assets are equity securities recorded at their original cost of $3,000. However, the current market value of those securities is $4,000 at yearend. If Apex properly accounts for the securities, determine the effect on Apex's current ratio and earnings per share.

Before Adjusting Its Current Passive Investments in Equity Securities, Apex