Question : 21) Rosewood Company had current assets of $582, current liabilities : 1230124

 

21) Rosewood Company had current assets of $582, current liabilities of $433, total assets of $732, and no long-term liabilities. If Rosewood executes a six-month note for $500, what is the new current ratio?

A) 0.76

B) 1.16

C) 1.34

D) 2.50

 

22) ABC Company has total assets of $360,000 and total liabilities of $200,000. The company collects an account receivable of $20,000. After this transaction, the company’s debt ratio will be:

A) 0.56.

B) 1.56.

C) 1.80.

D) 1.90.

 

23) Sam’s Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the current ratio.

 

Account

Debit

Credit

Cash

10,500

 

Accounts Receivable

3,800

 

Inventory

3,000

 

Store Supplies

1,900

 

Prepaid Rent

1,500

 

Land

28,000

 

Building

50,000

 

Accumulated Depreciation—Building

 

10,000

Store Equipment

27,000

 

Accumulated Depreciation—Store Equipment

 

15,625

Accounts Payable

 

9,000

Notes Payable due in one year

 

4,500

Salaries Payable

 

1,000

Unearned Revenue

 

12,000

Common Stock

 

31,655

Retained Earnings

 

4,920

Revenue

 

63,000

Rent Expense

7,000

 

Salaries Expense

14,000

 

Depreciation Expense—Building

3,500

 

Depreciation Expense—Store Equipment

1,500

 

TOTALS

$151,700

$151,700

 

 

24) Sam’s Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the debt ratio.

 

Account

Debit

Credit

Cash

10,500

 

Accounts Receivable

3,800

 

Inventory

3,000

 

Store Supplies

1,900

 

Prepaid Rent

1,500

 

Land

28,000

 

Building

50,000

 

Accumulated Depreciation–Building

 

10,000

Store Equipment

27,000

 

Accumulated Depreciation–Store Equipment

 

15,625

Accounts Payable

 

9,000

Notes Payable due in one year

 

4,500

Salaries Payable

 

           1,000

Unearned Revenue

 

12,000

Common Stock

 

31,655

Retained Earnings

 

4,920

Revenue

 

63,000

Rent Expense

7,000

 

Salaries Expense

14,000

 

Depreciation Expense–Building

3,500

 

Depreciation Expense–Store Equipment

1,500

 

TOTALS

$151,700

  $151,700

 

 

 

25) The adjusted trial balance of Debit Company is shown below:

 

Debit Company

Adjusted Trial Balance

December 31, 2012

 

Cash$6,500

Accounts receivable8,000

Supplies1,000

Prepaid Rent (3 months)2,500

Equipment, net42,000

Accounts payable$4,000

Salary payable2,000

Unearned revenue (2 month advance)2,000

Note payable — long term14,000

Common stock10,000

Retained earnings14,700

Dividends4,000

Service revenue75,000

Salary expense40,000

Rent expense10,000

Supplies expense1,500

Depreciation expense5,000

Utilities expense        1,200     

Total$121,700$121,700

 

REQUIRED:

A) Compute the company’s current ratio and debt ratio at the end of the year.

B) Assume the current ratio and debt ratio from the previous year was 2.50 and .40 respectively. Did the ratios improve or deteriorate from last year?