how would i compute the current ratio of this problem ? I just dont get it.?

Question

Compute Jamar Company’s current ratio using the following information:
Accounts receivable . . . . . . . $15,000 Long-term notes payable . . . . . . . . . $20,000
Accounts payable . . . . . . . . . 10,000 Office supplies . . . . . . . . . . . . . . . . . 1,800
Buildings . . . . . . . . . . . . . . . . 42,000 Prepaid insurance . . . . . . . . . . . . . . 2,500
Cash . . . . . . . . . . . . . . . . . . 6,000 Unearned services revenue . . . . . . . 4,000

Answer 1

The current ratio is the ratio of current assets to current liabilities.

Current assets:
AR 15,000
Office supplies 1,800 (I presume these are stocks of supplies)
Prepaid insurance 2,500
Cash 6,000
Total current assets 25,300

Current liabilities
AP 10,000
Unearned svcs revenue 4,000
Total current liab 14,000

Current ratio is current assets divided by current liab
so current ratio = 25,300/14,000 = 1.8

Notes:
Long-term notes payable are by definition long-term and therefore not current.
Buildings are fixed assets and again not current
Unearned svcs revenue is current liab. It's cash received for svcs you have yet to render. When you've performed the svcs, you'd reverse the unearned revenue to revenue. When you receive cash, you'd:
Dr Cash (asset a/c)
Cr Unearned svcs revenue (liab a/c)

When you've performed the svcs, you'd:
Dr Unearned svcs revenue
Cr Revenue from svcs rendered (revenue a/c)

Answer 2

current ratio = current assets / current liabilities

current assets from the above list are: accounts receivable, cash, office supplies, and prepaid insurance

current liabilities are: accounts payable and unearned services revenue

Answer 3

Jamar Company