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E4-6 Use the information in the adjusted trial balance reported in Exercise 4-4

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Use the information in the adjusted trial balance reported in Exercise 4-4 to compute the current ratio as of the balance sheet date (round the ratio to two decimals). Interpret the current ratio for the Webb Trucking Company. (Assume that the industry average for the current ratio is 1.5.)

Data from E4-4

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 16,500
Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000
Accumulated depreciation — Trucks . . . . . . . . . $ 35,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 11,000
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Long-term notes payable . . . . . . . . . . . . . . . . . 52,000
K. Webb, Capital . . . . . . . . . . . . . . . . . . . . . . . . 161,000
K. Webb, Withdrawals . . . . . . . . . . . . . . . . . . . 19,000
Trucking fees earned . . . . . . . . . . . . . . . . . . . . . 128,000
Depreciation expense — Trucks . . . . . . . . . . . . 22,500
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Office supplies expense . . . . . . . . . . . . . . . . . . 7,000
Repairs expense — Trucks . . . . . . . . . . . . . . . . . 11,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $390,000 $390,000

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