Simon Company's year-end balance sheets follow. At December 31 2017 2016 2015 Assets $ 30,510 $ 36,391 $ 88,428 113,450 10,126 285,160 $ 527,674 $ 454,891 $ 390,800 Cash Accounts receivable, net Merchandise inventory Prepaid expenses 64,322 84,996 9,648 259,534 37,915 51,586 54,939 4,428 241,932 Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings $ 132,705 $ 76,877 $ 50,554 102,179 162,500 105,671 162,500 109,843 $ 527,674 $ 454,891 $ 390,800 84,639 162,500 93,107 130,290 Total liabilities and equity 1. Compute the current ratio for the year ended 2017, 2016, and 2015. 2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015.
Simon Company's year-end balance sheets follow. At December 31 2017 2016 2015 Assets $ 30,510 $ 36,391 $ 88,428 113,450 10,126 285,160 $ 527,674 $ 454,891 $ 390,800 Cash Accounts receivable, net Merchandise inventory Prepaid expenses 64,322 84,996 9,648 259,534 37,915 51,586 54,939 4,428 241,932 Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings $ 132,705 $ 76,877 $ 50,554 102,179 162,500 105,671 162,500 109,843 $ 527,674 $ 454,891 $ 390,800 84,639 162,500 93,107 130,290 Total liabilities and equity 1. Compute the current ratio for the year ended 2017, 2016, and 2015. 2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter7: Inventories
Section: Chapter Questions
Problem 8PEA: Financial statement data for years ending December 31 for Holland Company follow: a. Determine the...
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Transcribed Image Text:Required 1
Required 2
Compute the acid-test ratio for the years ended December 31, 2017, 2016, and 2015.
Acid-Test Ratio
Choose Numerator:
I Choose Denominator:
Acid-Test Ratio
+
+
Acid-test ratio
2017:
+
+
to 1
%3D
2016:
+
+
to 1
%3D
2015:
+
+
to 1
II
II
Transcribed Image Text:Simon Company's year-end balance sheets follow.
At December 31
2017
2016
2015
Assets
$ 30,510 $ 36,391 $
88,428
113,450
10,126
285,160
37,915
51,586
54,939
4,428
241,932
Cash
Accounts receivable, net
Merchandise inventory
64,322
84,996
9,648
259,534
Prepaid expenses
Plant assets, net
Total assets
$ 527,674 $ 454,891 $ 390,800
Liabilities and Equity
Accounts payable
Long-term notes payable secured by
mortgages on plant assets
Common stock, $10 par value
Retained earnings
$ 132,705 $
76,877 $
50,554
102,179
162,500
130,290
105,671
162,500
109,843
84,639
162,500
93,107
$ 527,674 $ 454,891 $ 390,800
Total liabilities and equity
1. Compute the current ratio for the year ended 2017, 2016, and 2015.
2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Compute the current ratio for the years ended December 31, 2017, 2016, and 2015.
Current Ratio
Choose Numerator:
| Choose Denominator:
Current Ratio
%3D
Current ratio
2017:
to 1
%3D
2016:
to 1
2015:
to 1
%3D
II
Expert Solution
Step 1
The current ratio is the measure of a company's ability to pay back its short-term debts. It is calculated by dividing the current assets of the company by the current liabilities.
The acid-test ratio is a more conservative measure of a company's ability to pay back its short-term debts. It is calculated by dividing the current assets less inventory by the current liabilities.
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