Coastal Company's balance sheet reported total assets of $473,000, which include: cash, $35,000; accounts receivable, $150,000; land, $100,000; inventory, $180,000; and prepaid expenses, $8,000. Total liabilities amounted to $244,000, which include: accounts payable, $130,000; short-term notes payable, $8,000; unearned revenue, $6,000; and long-term liabilities, $100,000. Compute the current ratio.

1.93

Explanation:

Computation for current ratio

Using this formula

Current ratio= Total Current assets÷ Total Current liabilities

Let plug in the formula

Where ,

CURRENT ASSETS=Cash $35,000 + Accounts receivable + $150,000 + Land $100,000+Inventory $180,000 +Prepaid expenses $8,000

Total Current assets=$473,000

CURRENT LIABILITIES =Accounts payable $130,000 + Short-term notes payable +$8,000 Unearned revenue $6,000 + Long-term liabilities $100,000

Total Current liabilities =$244,000

Hence,

Current ratio=$473,000/$244,000

Current ratio=1.93

Therefore Current ratio will be 1.93

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