Answer (A) is correct . Total assets equal total liabilities and equity. Hence, if total assets equal $100, total liabilities and equity must equal $100, and current liabilities must equal $30 ($100 – $40 – $30). Because the quick ratio equals the quick assets (cash + accounts receivable) divided by current liabilities, the quick assets must equal $36 ($30 × 1.2 quick ratio), and the accounts receivable balance is $26 ($36 – $10 cash).
Answer (B) is incorrect because The quick assets equal $36.
Answer (C) is incorrect because The sum of the quick assets and current liabilities equals $66.
Answer (D) is incorrect because Total assets equal $100.
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The company has an accounts receivable balance of
