qs 4-22 (algo) computing and interpreting acid-test ratio lo a1\nthe following information on current assets…

qs 4-22 (algo) computing and interpreting acid-test ratio lo a1\nthe following information on current assets and current liabilities is for belkin company\ncash $1,350 prepaid expenses $700\naccounts receivable 2,811 accounts payable 5,000\ninventory 6,400 other current liabilities 700\ncomplete this question by entering your answers in the tabs below.\nrequired a required b\ncompute belkins acid - test ratio.\nbelkins acid - test ratio\nnumerator: / denominator: = acid - test ratio\nquick assets / current liabilities = acid - test ratio\n/ = 0 to 1

qs 4-22 (algo) computing and interpreting acid-test ratio lo a1\nthe following information on current assets and current liabilities is for belkin company\ncash $1,350 prepaid expenses $700\naccounts receivable 2,811 accounts payable 5,000\ninventory 6,400 other current liabilities 700\ncomplete this question by entering your answers in the tabs below.\nrequired a required b\ncompute belkins acid - test ratio.\nbelkins acid - test ratio\nnumerator: / denominator: = acid - test ratio\nquick assets / current liabilities = acid - test ratio\n/ = 0 to 1

Answer

Explanation:

Step1: Calculate quick assets

Quick assets = Cash + Accounts receivable+ Prepaid expenses Quick assets = $1,350 + 2,811+700=$4,861$

Step2: Calculate current liabilities

Current liabilities = Accounts payable + Other current liabilities Current liabilities = $5,000 + 700=$5,700$

Step3: Calculate acid - test ratio

Acid - test ratio=$\frac{\text{Quick assets}}{\text{Current liabilities}}$ Acid - test ratio=$\frac{4861}{5700}\approx0.85$

Answer:

0.85