Assume that the current ratio for Arch Company is 3.5, its acid-test ratio is 2.0, and its working capital is $360,000. Answer each of the following questions independently, always referring to the original information.Required:If the firm pays an account payable of $53,000, what will its new current ratio and working capital be?Note: Do not round intermediate calculations. Round "Current ratio" to 1 decimal place.If the firm sells inventory that was purchased for $50,000 at a cash price of $64,000, what will its new acid-test ratio be?Note: Do not round intermediate calculations. Round your answer to 1 decimal place.

Let current liability is x, then current assets is 3.5 x Working Capital = Current Assets - Current…

Answered: Assume that the current ratio for Arch…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that the current ratio for Arch Company is 3.5, its acid-test ratio is 2.0, and its working capital is $360,000. Answer each of the following questions independently, always referring to the original information.

Required:

If the firm pays an account payable of $53,000, what will its new current ratio and working capital be?

Note: Do not round intermediate calculations. Round "Current ratio" to 1 decimal place.
If the firm sells inventory that was purchased for $50,000 at a cash price of $64,000, what will its new acid-test ratio be?

Note: Do not round intermediate calculations. Round your answer to 1 decimal place.

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