Question

Jones Company has Cash of $600, Accounts Receivable of $500, Office Supplies of $100, and a Building with a cost of $50,000. Jones Company owes $300 on Accounts Payable and has Salaries Payable of $200. What is Jones Company’s ratio?

Answer 1

The correct answer is 2.40.

Step-by-step explanation:

According to the scenario, given data are as follows:

Cash = $600

Accounts Receivable = $500

Office supplies = $100

Cost of Building = $50,000

Accounts payable = $300

Salaries payable = $200

So, company's ratio can be calculated by following formula:

Company Ratio = Current Assets / Current Liabilities

Where, Current Assets = ( Cash + Accounts Receivable + Office supplies )

= ( $600 + $500 + $100 ) = $1,200

Current Liabilities = ( Accounts payable + Salaries payable )

= ( $300 + $200 ) = $500

Hence, Company Ratio = $1200 / $500

= 2.4

So, Jones Company's ratio is 2.4.