ANALYSIS OF LIQUIDITY Based on the comparative income statement and balance sheet of Ace Kitchen Works, Inc.,
Question:
ANALYSIS OF LIQUIDITY Based on the comparative income statement and balance sheet of Ace Kitchen Works, Inc., that follow, compute the following liquidity measures for 20-2 (round all calculations to two decimal places):
(a) Quick or acid-test ratio
(b) Current ratio
(c) Workingcapital
Transcribed Image Text:
Ace Kitchen Works, Inc. Comparative Income Statement For Years Ended December 31, 20-2 and 20-1 20-2 $2,643,000 1,868,200 $ 774,800 244,600 20-1 $2,176,400 1,614,200 $ 562,200 221,800 24,200 Net sales (on account) Cost of goods sold Gross profit Operating expenses Other expense (interest) Income tax expense Net income 24,200 101,200 215,000 161,900 $ 344,100 Ace Kitchen Works, Inc. Comparative Balance Sheet December 31, 20-2 and 20-1 20-2 $ 129,000 300,000 892,400 952,800 50,600 20-1 Cash 106,800 300,000 787,400 866,200 46,600 108,200 Government notes Accounts receivable (net) Merchandise inventory Supplies and prepayments Land 108,200 330,000 Building (net) Office equipment (net) Total assets 390,600 15,000 $2,620,800 13,600 $2,776,600 $ 608,000 200,000 $ 808,000 $ 507,200 220,000 $ 727,200 Current liabilities (accounts payable) Bonds payable Total liabilities Common stock ($10 par, 170,000 shares) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $1,700,000 268,600 $1,968,600 $2,776,600 $1,700,000 193,600 $1,893,600 $2,620,800
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