The following information is available about the company:

a.	All sales during the year were on account.
b.	There was no change in the number of shares of common stock outstanding during the year.
c.	The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year.
d.	Selected balances at the beginning of the current year were:

Accounts receivable	$	100,000
Inventory	$	220,000
Total assets	$	1,050,000

e.	Selected financial ratios computed from the statements below for the current year are:

Earnings per share	$	1.92
Debt-to-equity ratio		0.800
Accounts receivable turnover		16.0
Current ratio		2.00
Return on total assets		10	%
Times interest earned ratio		5.0
Acid-test ratio		1.13
Inventory turnover		9.0

Required:

Compute the missing amounts on the company's financial statements. (What’s the difference between the acid-test ratio and the current ratio?)

Income Statement
For the year ended March 31
Sales	$2,500,000
Cost of Goods Sold	$1,773,000
Gross Margin	$727,000
Selling and administrative expense	$622,000
Net Operating Income	$105,000
Interest Expense	$40,000
Net Income before taxes	$65,000
Income taxes (40%)	$26,000
Net Income	$39,000

Answer rating: 100% (QA)

The difference between current ratio and acid test ratio is ... View the full answer