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.

You should divide by 1,025,000 not 500,000 you should include the bonds payable due in 1/1 2008

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?

In this case you should divide by the accounts payable and notes payable due in June 2002 (250,000) because it is current payable.

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

That's it