The financial statements for Myers Service Company include the following items
2017 2016
Cash $51,500 $49,000
Short-term Investments 27,000 13,500
Net Accounts Receivable 55,000 52,000
Merchandise Inventory 131,000 47,000
Total Assets 528,000 553,000
Accounts Payable 129,500 124,000
Salaries Payable 23,000 19,000
Long-term Note Payable 60,000 60,000
Compute the acid-test ratio for 2016. (Round your answer to two decimal places)
A) 0.88
B) 0.80
C) 0.92
D) 0.71
B .B)
Acid-test ratio = (Cash + Short-term investments + Net current receivables) / Total current liabilities
Acid-test ratio = (Cash $49,000 + Short-term investments $13,500 + Net current receivables $52,000 ) / (Accounts payable $124,000 + Salaries Payable $19,000 )
Acid-test ratio = $114,500 / $143,000
Acid-test ratio = 0.80
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