Some of the accounts appearing in the year-end financial statements of Roger Grocery, Inc., appear below. This list includes all of the company’s current assets and current liabilities.

Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,880,000

Accumulated depreciation: equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370,000

Notes payable (due in 90 days) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . . . . 70,000

Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 241,320

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . . . . . 67,600

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . 150,000

Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 175,040

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . 127,500

Mortgage payable (due in 15 years). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320,000

Salaries payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 7,570

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 25,000

Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 14,600

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . 230,540

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 179,600

Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 10,000

Unexpired insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 4, 50

Instructions

a. Prepare a schedule of the company’s current assets and current liabilities. Select the appropriate items from the preceding list.

b. Compute the current ratio and the amount of working capital. Explain how each of these measurements is computed. State, with reasons, whether you consider the company to be in a strong or weak current position.