The accountant at Intellectual Property Inc. gathered the following selected accounting information:

2019 2020

Cash. $ 35,000 $33,000

Short-term investments 28,000 29,000

Accounts receivable (net). 33,000 30,000

Inventory 47,000 50,000

Prepaid expenses 7,000 5,500

Accounts payable 55,000 62,000

Salaries payable 10,000 8,000

Income taxes payable 3,000 2,500

Bonds payable (due 2019) 90,000 90,000

Sales 250,000 230,000

Cost of goods sold 180,000 165,000

Required:

a. Compute the acid-test ratio for 2019 and 2020.

b. Compute the days' sales in average receivables for 2019 and 2020.

Net accounts receivable on December 31, 2018 was $27,000.

Answer rating: 100% (QA)

To calculate the acidtest ratio and days sales in average receivables we will use the given accounti... View the full answer