21) Rosewood Company had current assets of $582, current liabilities of $433, total assets of $732, and no long-term liabilities. If Rosewood executes a six-month note for $500, what is the new current ratio?

A) 0.76

B) 1.16

C) 1.34

D) 2.50

 

22) ABC Company has total assets of $360,000 and total liabilities of $200,000. The company collects an account receivable of $20,000. After this transaction, the company's debt ratio will be:

A) 0.56.

B) 1.56.

C) 1.80.

D) 1.90.

 

23) Sam's Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the current ratio.

 

Account	Debit	Credit
Cash	10,500
Accounts Receivable	3,800
Inventory	3,000
Store Supplies	1,900
Prepaid Rent	1,500
Land	28,000
Building	50,000
Accumulated Depreciation—Building		10,000
Store Equipment	27,000
Accumulated Depreciation—Store Equipment		15,625
Accounts Payable		9,000
Notes Payable due in one year		4,500
Salaries Payable		1,000
Unearned Revenue		12,000
Common Stock		31,655
Retained Earnings		4,920
Revenue		63,000
Rent Expense	7,000
Salaries Expense	14,000
Depreciation Expense—Building	3,500
Depreciation Expense—Store Equipment	1,500
TOTALS	$151,700	$151,700

 

 

24) Sam's Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the debt ratio.

 

Account	Debit	Credit
Cash	10,500
Accounts Receivable	3,800
Inventory	3,000
Store Supplies	1,900
Prepaid Rent	1,500
Land	28,000
Building	50,000
Accumulated Depreciation–Building		10,000
Store Equipment	27,000
Accumulated Depreciation–Store Equipment		15,625
Accounts Payable		9,000
Notes Payable due in one year		4,500
Salaries Payable		1,000
Unearned Revenue		12,000
Common Stock		31,655
Retained Earnings		4,920
Revenue		63,000
Rent Expense	7,000
Salaries Expense	14,000
Depreciation Expense–Building	3,500
Depreciation Expense–Store Equipment	1,500
TOTALS	$151,700	$151,700

 

 

 

25) The adjusted trial balance of Debit Company is shown below:

 

Debit Company

Adjusted Trial Balance

December 31, 2012

 

Cash$6,500

Accounts receivable8,000

Supplies1,000

Prepaid Rent (3 months)2,500

Equipment, net42,000

Accounts payable$4,000

Salary payable2,000

Unearned revenue (2 month advance)2,000

Note payable — long term14,000

Common stock10,000

Retained earnings14,700

Dividends4,000

Service revenue75,000

Salary expense40,000

Rent expense10,000

Supplies expense1,500

Depreciation expense5,000

Utilities expense        1,200     

Total$121,700$121,700

 

REQUIRED:

A) Compute the company's current ratio and debt ratio at the end of the year.

B) Assume the current ratio and debt ratio from the previous year was 2.50 and .40 respectively. Did the ratios improve or deteriorate from last year?