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Question & Answer: Bass Tours…..

Bass Tours

The following balances were taken from the company’s records:

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Inventory $380,000 Accounts Receivable $190,000
Land 290,000 Accounts Payable 180,000
Cash 129,000 Unearned Revenue 110,000
Prepaid Rent 33,000 Common Stock 312,000
Retained Earnings 220,000 Long-term Notes Payable 200,000
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Refer to Bass Tours. Calculate the current ratio.

a. 3.00 to 1
b. 2.75 to 1
c. 2.52 to 1
d. 2.10 to 1

Expert Answer

 

Current ratio=inventory +Cash+prepaid rent+Accounts receivable/Accounts payable+unearned service revenue

=$380,000+$129,000+$33,000+190,000/$180,000+$110,000

=2.52 to 1.

So the option is C.

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