Question

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

Note payable, long-term.......... $7800
Prepaid rent.............................. 2300
Salary payable.......................... 3000
Service revenue........................ 29,400
Supplies.................................... 500


Accounts payable..................... $3700
Accounts receivable................. 5700
Cash.......................................... 3500
Depreciation expense.............. 6000
Equipment................................ 15,000


Requirements
a. Calculate Heart of Tennessee Telecom's current ratio.
b. How much in current assets does Heart of Tennessee Telecom have for every dollar of current liabilities that it​ owes?

Answer 1

Step-by-step explanation:

a. Current ratio = current assets/ current liability

= current assets= 2,300+5,700+3,500= 11,500

Current liability= 3,000+3700= 6,700

Current ratio = 11,500/3700

= 1.72

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

It has $1.72