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Exercise 1 Chapter 4 The following data are taken from the financial statements of Keanan...

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Accounting

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Exercise 1 Chapter 4 The following data are taken from the financial statements of Keanan Company as of the end of the year 2017. The data are in alphabetical order. Accounts Payable........... $28,000 Profit ....... .................. 48,000 Accounts Receivable ......... 66,000 Supplies ...................... 8,600 Cash 54,000 Total assets ................. 250,000 Other current liabilities ....... 17,000 Total liabilities ................ 200,000 Prepaid Insurance........... 2,000 Wages payable .. 5,000 Instructions a) Calculate Keanan Company's working capital, current ratio, and acid-test ratio. b) Explain what additional information you would require in order to use the three measures to evaluate Keanan's liquidity. a) Working capital = Current assets - Current liabilities Current ratio = Current assets + Current liabilities Acid-test ratio = (Cash + Accounts Receivable) + Current liabilities

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