Biology Forums - Study Force

The accountant at Wilton and Jones gathered the following selected accounting information:

      2014   2013
   Cash   $ 40,000   $ 35,000
   Short-term investments   30,000   17,000
   Accounts receivable (net)   35,000   25,000
   Inventory   65,000   65,000
   Prepaid expenses   7,000   9,000
   Accounts payable   60,000   54,000
   Salary payable   14,000   15,000
   Income taxes payable   11,000   13,000
   Bonds payable (due 2019)   80,000   80,000
   Net credit sales   270,000   235,000
   Cost of goods sold   165,000   141,000

a) Compute the acid-test ratio for 2014 and 2013.
b) Compute the days' sales in receivables for 2013 and 2014. The accounts receivable (net) at December 31, 2012, were $39,000.
c) Are the ratios improving or deteriorating?

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