←At year-end, Sally Company has cash of $10,000, current accounts receivable of $10,000, merchandise inventory of$44,000, and prepaid expenses totaling $5,300. Liabilities of $50,000 must be paid next year. What is Sally's acid-testratio? (Round your answer to two decimal places.)OA. 0.40OB. 0.20O C.1.28O D. Cannot be determined from the data given

Lets understand the basics. Acid test ratio is also known as quick ratio. It is a ratio which…

Answered: At year-end, Sally Company has cash of…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 8CE

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At year-end, Sally Company has cash of $10,000, current accounts receivable of $10,000, merchandise inventory of $44,000, and prepaid expenses totaling $5,300. Liabilities of $50,000 must be paid next year. What is Sally's acid-test ratio? (Round your answer to two decimal places.)