The post-closing trial balance of Chester Company at December 31, Year 1 is as follows:
Required: 1) Use the trial balance of Chester Company to prepare the current assets and current liabilities sections of Chester's balance sheet at December 31, Year 1. 2) Calculate the current ratio at December 31, Year 1. Show all calculations and round the ratio to two decimal places.
What will be an ideal response?
1)
| Current Assets: | ? |
| Cash | $ 20,000 |
| Marketable securities | 32,000 |
| Accounts receivable | 48,000 |
| Inventory | 80,000 |
| Total | $ 180,000 |
| ? | ? |
| Current Liabilities: | ? |
| Accounts payable | $ 72,000 |
| Unearned revenue | 8,000 |
| Notes payable - due in 6 months | 40,000 |
| Total | $ 120,000 |
2) 1.5 to 1
Current ratio = Current assets of $180,000 ÷ Current liabilities of $120,000 = 1.5 to 1
Business
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