Chapter 4, Problem 4.13SE

Calculating the current ratio

Heart of Tennessee Telecom has these account balances at December 31, 2016:

Notes Payable, long-term	$ 8,500
Accounts Payable	$ 3,700
Prepaid Rent	1,500
Accounts Receivable	6,900
Salaries Payable	1,200
Cash	3,400
Service Revenue	14,900
Depreciation Expense-Equip.	1,500
Office Supplies	500
Equipment	19,000
Accumulated Depreciation-Equip.	3,000
Common Stock	3,100
Advertising Expense	600
Rent Expense	1,000

Requirements

1. Calculate Heart of Tennessee Telecom’s current ratio.

2. How much in current assets does Heart of Tennessee Telecom have for every dollar of current liabilities that it owes?