[JLAllison8791]

I know the formula for both ratios.

Current Ratio = current assets/current liabilities
Acid-Test Ratio = (Cash Short-Term Investments Current Receivables)/Current Liabilities

... but I don't know what numbers to use for these. The numbers I have for my general journal are...


DEBITS


Cash - 24,300
Merchandise inventory - 10,100
Store supplies - 2,300
Prepaid insurance - 950
Store equipment - 42,600
Owner, Withdrawals - 2,150
Sales discounts - 1,850
Sales returns and allowances - 2,050
Cost of goods sold - 39,900
Depreciation expense--Store equipment - 1,500
Salaries expense - 31,300
Insurance expense - 1,650
Rent expense - 13,000
Store supplies expense - 3,000
Advertising expense - 9,400

CREDITS

Accumulated depreciation--Store equipment - 18,250
Accounts payable - 17,000
Owner, Capital - 35,000
Sales - 115,800

Please help! Thank you!

[Bubba_Smith]

For the Current Ratio, you first must identify which accounts in your chart of accounts shown are Current Assets and which are Current Liabilities.

Generally, all of the accounts fall into one of the following types: Assets, Liabilities, Owners Equity, Revenue, or Expense. (There are a few more advanced types)

Once you know which are which, then from among the Assets and Liabilities, select which are "current". In the case of an asset, "current" simply means that the asset can be expected to be turned into cash in one one year or less. Examples: Accounts Receivable: You expect the customers to pay you in a year or less. Inventory: You expect to sell the inventory multiple times in a single year. (Note: Cash is a current asset because it is already cash. You might think of it as the most current of the current assets.)

Once you can Identify the account types, then you can choose the correct account balances to apply to the formulas you listed above. Google the account terms in the formulas to get definitions to gain understanding of the account types.