Gamez, Eileen Week 1 ACC305

Gamez, Eileen Week 1 ACC305 - E3-18The current asset...

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Unformatted text preview: E3-18The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities, accounts receivable, and inventories. The December 31, 2011, balance sheet revealed the following:Inventories $ 840,000Total assets $2,800,000Current ratio2.25Acid-test ratio 1.2Debt to equity ratio1.8Required: Determine the following 2011 balance sheet items: CALCULATIONS:Current ratio: 2.25 = $1,800,000 (current assets) / $800,000 (current liabilities)Acid-Ratio test = 1.2 = $960,000 (quick assets) / $800,000 (current liability)Debt to equity - $1,800,000 (total liability) / $1,000,000 (share holder’s equity)2.25 – 1.2 = 1.05$840,000 / 1.05 = $800,000 (current liability)$800,000 x 2.25 = $1,800,000 (current assets)$2,800,000 (total assets) - $1,800,000 (current assets) = $1,000,000 (noncurrent assets)$1,800,000 (current assets) - $800,000 (current liability) = $1,000,000 (shareholders’ equity)$1,800,000 (total liability) - $800,000 (current liability) = $1,000,000...
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This note was uploaded on 08/19/2011 for the course ACC 305 ACC 305 taught by Professor Stern during the Spring '11 term at Ashford University.

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Gamez, Eileen Week 1 ACC305 - E3-18The current asset...

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