Excerpts from Sydner Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The current ratio at the end of Year 2 is closest to:
A) 1.67
B) 0.32
C) 0.80
D) 0.41

Question

Excerpts from Sydner Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.The current ratio at the end of Year 2 is closest to:
A) 1.67 
B) 0.32 
C) 0.80 
D) 0.41

Quizplus · Accepted Answer

We need to calculate the current ratio at the end of Year 2.

Current assets = Cash + Accounts receivable + Inventory 
= $180 + $190 + $210 
= $580

Current liabilities = Accounts payable 
= $350

Current ratio = Current assets / Current liabilities 
= $580 / $350 
= 1.66

Therefore, the closest answer is A) 1.67.

Excerpts from Sydner Corporation's Most Recent Balance Sheet Appear Below