### Solution for Wilson Trucking Company
To calculate the current ratio, follow these steps:
#### (a) Calculation of the Current Ratio:
1. Current Assets:
- Cash: \[tex]$8,200
- Accounts Receivable: \$[/tex]16,500
- Office Supplies: \[tex]$2,000
The total of current assets is calculated by adding these amounts:
\[
\text{Current Assets} = \$[/tex]8,200 + \[tex]$16,500 + \$[/tex]2,000 = \[tex]$26,700
\]
2. Current Liabilities:
- Accounts Payable: \$[/tex]12,200
- Interest Payable: \[tex]$3,000
The total of current liabilities is calculated by adding these amounts:
\[
\text{Current Liabilities} = \$[/tex]12,200 + \[tex]$3,000 = \$[/tex]15,200
\]
3. Current Ratio Calculation:
The current ratio is calculated by dividing the total current assets by the total current liabilities:
[tex]\[
\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} = \frac{26,700}{15,200} \approx 1.76
\][/tex]
#### (b) Comparison with Competitor (Spalding):
The competitor, Spalding, has a current ratio of 1.5. Comparing the two ratios:
- Wilson Trucking Company: 1.76
- Spalding: 1.5
Wilson Trucking has a higher current ratio compared to Spalding, which suggests that Wilson Trucking is in a better position to pay off its short-term obligations.
### Summary:
- Current Assets: \[tex]$26,700
- Current Liabilities: \$[/tex]15,200
- Current Ratio: 1.76
When comparing to Spalding's current ratio of 1.5, Wilson Trucking is better able to pay its short-term obligations.
