The following data are provided: December 31 2021 2020Cash$ 1300000 $ 1005000Accounts receivable (net)1500000 1150000Inventories2600000 2100000Plant assets (net)6000000 6600000Accounts payable1150000 820000Income taxes payable220000 90000Bonds payable1400000 140000010% Preferred stock, $50 par1800000 1800000Common stock, $10 par2300000 1700000Paid-in capital in excess of par1650000 1400000Retained earnings4100000 3400000Net credit sales12800000 Cost of goods sold8500000 Operating expenses2900000 Net income1600000 Additional information:Depreciation included in cost of goods sold and operating expenses is $1200000. On May 1, 2021, 60000 shares of common stock were issued. The preferred stock is cumulative. The preferred dividends were not declared during 2021.At December 31, 2021, the acid-test ratio was2800 ÷ 2070.5400 ÷ 1370.2800 ÷ 1370.4100 ÷ 1650.

The acid test ratio is calculated by deducting the inventories from the current assets and diving by…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following data are provided:

	December 31
	2021	2020
Cash	$ 1300000	$ 1005000
Accounts receivable (net)	1500000	1150000
Inventories	2600000	2100000
Plant assets (net)	6000000	6600000
Accounts payable	1150000	820000
Income taxes payable	220000	90000
Bonds payable	1400000	1400000
10% Preferred stock, $50 par	1800000	1800000
Common stock, $10 par	2300000	1700000
Paid-in capital in excess of par	1650000	1400000
Retained earnings	4100000	3400000
Net credit sales	12800000
Cost of goods sold	8500000
Operating expenses	2900000
Net income	1600000

Additional information:
Depreciation included in cost of goods sold and operating expenses is $1200000. On May 1, 2021, 60000 shares of common stock were issued. The preferred stock is cumulative. The preferred dividends were not declared during 2021.

At December 31, 2021, the acid-test ratio was

2800 ÷ 2070.

5400 ÷ 1370.

2800 ÷ 1370.

4100 ÷ 1650.

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