Question

The classified balance sheet for a company reported current assets of $1,689,246, total liabilities of $816,540, Common Stock of $1,170,000, and Retained Earnings of $147,260. The current ratio was 2.6 What is the total amount of current liabilities? Multiple Choice

a-$649,710
b-$872.706
c-$86,540
d-$444,554

Answer 1

The total amount of current liabilities for the company, calculated using the current ratio and current assets, is $649,710.

option (A)

Step-by-step explanation:

The classified balance sheet for a company indicates a current ratio of 2.6, with current assets reported as $1,689,246. The current ratio is calculated by dividing current assets by current liabilities. Therefore, to find the total amount of current liabilities, we can use the formula:

Current Ratio = Current Assets / Current Liabilities

By rearranging the formula to find Current Liabilities, we get:

Current Liabilities = Current Assets / Current Ratio

Substituting the given values:

Current Liabilities = $1,689,246 / 2.6

Current Liabilities = $649,710

This indicates that the total amount of current liabilities for the company is $649,710, which corresponds to option (a).