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zer0latency zer0latency
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10 months ago

Freiman Corporation's most recent balance sheet and income statement appear below:

Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Year 2Year 1
Assets
Current assets:
Cash$ 196$ 156
Accounts receivable, net310330
Inventory156166
Prepaid expenses5858
Total current assets720710
Plant and equipment, net880880
Total assets$ 1,600$ 1,590
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$ 166$ 186
Accrued liabilities108108
Notes payable, short term7888
Total current liabilities352382
Bonds payable334344
Total liabilities686726
Stockholders' equity:
Common stock, $2 par value136136
Additional paid-in capital290290
Retained earnings488438
Total stockholders' equity914864
Total liabilities & stockholders' equity$ 1,600$ 1,590

Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)$ 2,030
Cost of goods sold1,140
Gross margin890
Selling and administrative expenses449
Net operating income441
Interest expense71
Net income before taxes370
Income taxes (30%)111
Net income$ 259

The acid-test (quick) ratio at the end of Year 2 is closest to:



▸ 1.14

▸ 1.44

▸ 1.68

▸ 2.11
Textbook 
Introduction to Managerial Accounting: Brewer Edition: 9e

Introduction to Managerial Accounting: Brewer Edition: 9e


Edition: 9th
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amandashimkusamandashimkus
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