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5-12 Please show all work. LO 7 S5-12. (Learning Objective 7: Evaluate liquidity using the quick [acid-test] ratio and days' sales in receivables) Northern Products
5-12 Please show all work.
LO 7 S5-12. (Learning Objective 7: Evaluate liquidity using the quick [acid-test] ratio and days' sales in receivables) Northern Products reported the following amounts in its 2022 financial statements. The 2021 amounts are given for comparison. 2022 2021 $ 9,500 10,500 $ 9,500 7,000 $86,500 $70,100 Current assets: Cash.... Short-term investments. Accounts receivable.... Less: Allowance for uncollectibles......... Inventory......... Prepaid insurance. Total current assets. Total current liabilities. Net sales (all on account) (7,500) (5,500) 79,000 189,000 2,200 290,200 99,000 1,077,000 64,600 190,000 2,200 273,300 106,000 734,000 Requirements 1. Compute Northern's quick (acid-test) ratio at the end of 2022. Round to two decimal places. How does the quick ratio compare with the industry average of 0.92? 2. Compare days' sales outstanding for 2022 with the company's credit terms of net 30 daysStep by Step Solution
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