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Use This Balance Sheet and Income Statement for the First

Question 52

Multiple Choice

Use this balance sheet and income statement for the first year of operations for Layton Novelties to answer the following question. Use ending balances whenever average balances are required for computing ratios. Use this balance sheet and income statement for the first year of operations for Layton Novelties to answer the following question. Use ending balances whenever average balances are required for computing ratios. Laytan Navelties Income St-tement Far the Year Ended December 31, 2010 \begin{array}{lr} \text { Net sales } & \$ 80,000 \\ \text { Cost of goods sold } & 32,000 \\ \text { Gross margin } & \$ 48,000 \\ \text { Operating expenses } & 26,400\\\text { Net income }&\$21,600 \end{array} The current ratio for Layton Novelties is A) 1.75. B) 0.57. C) 1.4. D) 2.0. Laytan Navelties
Income St-tement
Far the Year Ended December 31, 2010
 Net sales $80,000 Cost of goods sold 32,000 Gross margin $48,000 Operating expenses 26,400 Net income $21,600\begin{array}{lr}\text { Net sales } & \$ 80,000 \\\text { Cost of goods sold } & 32,000 \\\text { Gross margin } & \$ 48,000 \\\text { Operating expenses } & 26,400\\\text { Net income }&\$21,600\end{array} The current ratio for Layton Novelties is


A) 1.75.
B) 0.57.
C) 1.4.
D) 2.0.

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