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capella234 capella234
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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$ 160$ 120
Accounts receivable, net220240
Inventory120130
Prepaid expenses4040
Total current assets540530
Plant and equipment, net700700
Total assets$ 1,240$ 1,230
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$ 130$ 150
Accrued liabilities9090
Notes payable, short term6070
Total current liabilities280310
Bonds payable280290
Total liabilities560600
Stockholders' equity:
Common stock, $2 par value100100
Additional paid-in capital200200
Retained earnings380330
Total stockholders' equity680630
Total liabilities & stockholders' equity$ 1,240$ 1,230

Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)$ 1,310
Cost of goods sold780
Gross margin530
Selling and administrative expenses359
Net operating income171
Interest expense35
Net income before taxes136
Income taxes (30%)41
Net income$ 95

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



▸ 0.96

▸ 1.36

▸ 1.50

▸ 1.93
Textbook 
Introduction to Managerial Accounting: Brewer Edition: 9e

Introduction to Managerial Accounting: Brewer Edition: 9e


Edition: 9th
Authors:
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