Answer each of the questions in the following unrelated situations. (a) The current ratio of a company is 6:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $513,000, what is the amount of current liabilities? Current liabilities $ (b) A company had an average inventory last year of $218,000 and its inventory turnover was 5. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year? Average inventory $ (c) A company has current assets of $88,000 (of which $43,000 is inventory and prepaid items) and current liabilities of $43,000. What is the current ratio? What is the acid-test ratio? If the company borrows $14,000 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, eg. 2.50.) Current ratio :1
Answer each of the questions in the following unrelated situations. (a) The current ratio of a company is 6:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $513,000, what is the amount of current liabilities? Current liabilities $ (b) A company had an average inventory last year of $218,000 and its inventory turnover was 5. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year? Average inventory $ (c) A company has current assets of $88,000 (of which $43,000 is inventory and prepaid items) and current liabilities of $43,000. What is the current ratio? What is the acid-test ratio? If the company borrows $14,000 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, eg. 2.50.) Current ratio :1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ll.
Transcribed Image Text:(c) A company has current assets of $88,000 (of which $43,000 is inventory and prepaid items) and current liabilities of $43,000. What
is the current ratio? What is the acid-test ratio? If the company borrows $14,000 cash from a bank on a 120-day loan, what will its
current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, e.g. 2.50.)
Current ratio
Acid-test ratio
New current ratio
New acid-test ratio.
:1
:1
:1
:1
(d) A company has current assets of $619,000 and current liabilities of $256,000. The board of directors declares a cash dividend of
$185,000. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the
dividend? (Round answers to 2 decimal places, e.g. 2.50)
Current ratio after the declaration but before payment
Current ratio after the payment of the dividend
1
Transcribed Image Text:Answer each of the questions in the following unrelated situations.
(a) The current ratio of a company is 6:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $513,000, what is
the amount of current liabilities?
Current liabilities
$
(b) A company had an average inventory last year of $218,000 and its inventory turnover was 5. If sales volume and unit cost remain
the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year?
Average inventory $
(c) A company has current assets of $88,000 (of which $43,000 is inventory and prepaid items) and current liabilities of $43,000. What
is the current ratio? What is the acid-test ratio? If the company borrows $14,000 cash from a bank on a 120-day loan, what will its
current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, eg. 2.50.)
Current ratio
:1
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