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 2 Year 1 Assets Current assets: Cash $ 170 $ 130 Accounts receivable, net 245 265 Inventory 130 140 Prepaid expenses 45 45 Total current assets 590 580 Plant and equipment, net 750 750 Total assets $ 1,340 $ 1,330 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 140 $ 160 Accrued liabilities 95 95 Notes payable, short term 65 75 Total current liabilities 300 330 Bonds payable 295 305 Total liabilities 595 635 Stockholders' equity: Common stock, $2 par value 110 110 Additional paid-in capital 225 225 Retained earnings 410 360 Total stockholders' equity 745 695 Total liabilities & stockholders' equity $ 1,340 $ 1,330 Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) Sales (all on account) $ 1,510 Cost of goods sold 880 Gross margin 630 Selling and administrative expenses 384 Net operating income 246 Interest expense 45 Net income before taxes 201 Income taxes (30%) 60 Net income $ 141 The acid-test (quick) ratio at the end of Year 2 is closest to: Multiple Choice 1.01 1.38 1.55 1.98

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

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

	Year 2	Year 1
Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Assets
Current assets:
Cash	$ 170	$ 130
Accounts receivable, net	245	265
Inventory	130	140
Prepaid expenses	45	45
Total current assets	590	580
Plant and equipment, net	750	750
Total assets	$ 1,340	$ 1,330
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 140	$ 160
Accrued liabilities	95	95
Notes payable, short term	65	75
Total current liabilities	300	330
Bonds payable	295	305
Total liabilities	595	635
Stockholders' equity:
Common stock, $2 par value	110	110
Additional paid-in capital	225	225
Retained earnings	410	360
Total stockholders' equity	745	695
Total liabilities & stockholders' equity	$ 1,340	$ 1,330

Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)	$ 1,510
Cost of goods sold	880
Gross margin	630
Selling and administrative expenses	384
Net operating income	246
Interest expense	45
Net income before taxes	201
Income taxes (30%)	60
Net income	$ 141

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

Multiple Choice

1.01
1.38
1.55
1.98

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions