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    Jindani's Avatar
    Jindani Posts: 21, Reputation: 1
    New Member
     
    #1

    Nov 1, 2008, 04:37 PM
    Current Ratio
    Marketable Securities 100,000
    bonds payable, due 1/1/2008 525,000
    cash 100,000
    equipment 350,000
    mortagage payable, due 7/1/2009 750,000
    accumlated depreciation-building 200,000
    copyright 75,000
    capital 800,000
    accounts payable 500,000
    accumalated depreciation-eqip. 100,000
    land 200,000
    merchandise inventory 375,000
    note payable, due 6/1/2002 250,000
    Building 1,000,000
    account Receiveable 925,000

    Current ratio formula is Current Asset divided by Current Liabilities

    Accourding to my calculation, cash+AR+MS+MI divided by AP
    100,000+925,000+100,000 +375,000 / 500,000 = 3
    Which is the wrong answer. I need help to find out where I'm making a mistake.
    hamzashakaa's Avatar
    hamzashakaa Posts: 161, Reputation: 8
    Junior Member
     
    #2

    Nov 2, 2008, 01:27 AM

    You should divide by 1,025,000 not 500,000 you should include the bonds payable due in 1/1 2008
    Jindani's Avatar
    Jindani Posts: 21, Reputation: 1
    New Member
     
    #3

    Nov 2, 2008, 07:48 AM
    One thing I forgot to mentioned it that I have to create a balnace sheet as of Dec 31, 2001.

    Still, do you think I should add accounts payable?
    hamzashakaa's Avatar
    hamzashakaa Posts: 161, Reputation: 8
    Junior Member
     
    #4

    Nov 3, 2008, 12:22 AM

    In this case you should divide by the accounts payable and notes payable due in June 2002 (250,000) because it is current payable.
    Jindani's Avatar
    Jindani Posts: 21, Reputation: 1
    New Member
     
    #5

    Nov 3, 2008, 03:42 PM
    Accourding to my calculation, cash+AR+MS+MI divided by AP
    100,000+925,000+100,000 +375,000 / +250,000+500,000 = 2

    SO MY NEW CURRENT RATIO WILL BE 2
    hamzashakaa's Avatar
    hamzashakaa Posts: 161, Reputation: 8
    Junior Member
     
    #6

    Nov 4, 2008, 12:13 AM

    That's it

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