This lab requires you to calculate current ratios and debt ratios by using the given balance sheet.

Required Setup and Resources:

Microsoft Word

Recommended Procedures:

Examine the following balance sheet for Jim?s Music Company:

Balance Sheet

Assets Liabilities

Cash $29,000 Accounts Payable $73,000

AR 114,000 Accrued Liabilities 27,000

Inventory 113,000 Notes Payable 42,000

Prepaid Expense 6,000 Total Current Liabilities 142,000

Total Current Assets 262,000 Long-Term Notes Payable 289,000

Long-Term Investments 18,000 Total Liabilities 431,000

PPE 507,000 Common Stock 186,000

Total Assets 787,000

Retained Earnings 170,000

Total Stockholders? Equity 356,000

Total Liabilities and Equity 787,000

For the given balance sheet, calculate the current ratio and debt ratio. In addition, explain what each ratio

represents and how it is used to determine the financial health of an organization.

Submission Requirements:

Submit your responses in a Microsoft Word document of the following specifications:

? Font: Arial, Size: 12 point

? Length: 2 pages

? Line Spacing: Double

AC1320: Module 2 Accounting Information Systems

Lab 2.1

Accounts Receivable

2

Evaluation Criteria:

The lab will be evaluated using the following criteria:

? Did you correctly calculate the current ratio?

? Did you determine what the current ratio represents and how it determines the financial health of

an organization?

? Did you correctly calculate the debt ratio?

? Did you determine what the debt ratio represents and how it determines the financial health of an

organization?

AC1320: Module 2 Accounting Information Systems Lab 2.1 Accounts Receivable This lab requires you to calculate current ratios and debt ratios by using the given balance sheet. Required Setup and Resources: Microsoft Word Recommended Procedures: Examine the following balance sheet for Jim's Music Company: Balance Sheet Assets Liabilities Cash $29,000 Accounts Payable $73,000 AR 114,000 Accrued Liabilities 27,000 Inventory 113,000 Notes Payable 42,000 Total Current Liabilities 142,000 Prepaid Expense 6,000 Total Current Assets 262,000 Long-Term Notes Payable 289,000 Long-Term Investments 18,000 Total Liabilities 431,000 PPE 507,000 Common Stock 186,000 Retained Earnings 170,000 Total Stockholders' Equity 356,000 Total Liabilities and Equity 787,000 Total Assets 787,000 For the given balance sheet, calculate the current ratio and debt ratio. In addition, explain what each ratio represents and how it is used to determine the financial health of an organization. Submission Requirements: Submit your responses in a Microsoft Word document of the following specifications: Font: Arial, Size: 12 point Length: 2 pages Line Spacing: Double 1 AC1320: Module 2 Accounting Information Systems Lab 2.1 Accounts Receivable Evaluation Criteria: The lab will be evaluated using the following criteria: Did you correctly calculate the current ratio? Did you determine what the current ratio represents and how it determines the financial health of an organization? Did you correctly calculate the debt ratio? Did you determine what the debt ratio represents and how it determines the financial health of an organization? 2