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How can the quick ratio be determined with the given information?

How can the quick ratio be determined with the given information?

FINANCIAL ACCOUNTING
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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How can the quick ratio be determined with the given information?

Email from Accounting Manager To: Andy Barker, Accounting Associate From: Doris Butterscotch, Accounting Manager RE: Inventory Costs Hi Andy, This is the first year we are adopting the EOQ model in inventory management. The CFO wants us to calculate cost of goods sold and inventory turnover for the year. L We do not produce the powerbanks ourselves. We purchase them from the wholesaler and resell them to customers. Therefore, inventory costs consist of only purchase costs, fixed ordering costs per order, and carrying costs. Because we use a computer reorder system, there are no stockout costs. We signed a contract with the wholesaler that fixes the purchase cost per powerbank and the order cost per order from 20X1 to 20X3. Carrying cost averages $6 per powerbank, and annual demand is expected to be 144,000 units. Please contact me if you need additional information. Regards, Doris
Transcribed Image Text:Email from Accounting Manager To: Andy Barker, Accounting Associate From: Doris Butterscotch, Accounting Manager RE: Inventory Costs Hi Andy, This is the first year we are adopting the EOQ model in inventory management. The CFO wants us to calculate cost of goods sold and inventory turnover for the year. L We do not produce the powerbanks ourselves. We purchase them from the wholesaler and resell them to customers. Therefore, inventory costs consist of only purchase costs, fixed ordering costs per order, and carrying costs. Because we use a computer reorder system, there are no stockout costs. We signed a contract with the wholesaler that fixes the purchase cost per powerbank and the order cost per order from 20X1 to 20X3. Carrying cost averages $6 per powerbank, and annual demand is expected to be 144,000 units. Please contact me if you need additional information. Regards, Doris
Financial Information / Ratio Financial Information 20X1 Sales ($50 per unit) $6,650,000 Current assets $4,000,000 Current liabilities $2,840,500 Note: The difference between the current and the quick ratio is due to inventory only. Contract with Supplier Bill to: Ferguson Company 510 SW 23rd St. Dayton, Ohio 23716 Description Powerbank Processing fee Quantity ? Order: 12137 September 10, 20X1 Price $30 Total Thank you for your business!
Transcribed Image Text:Financial Information / Ratio Financial Information 20X1 Sales ($50 per unit) $6,650,000 Current assets $4,000,000 Current liabilities $2,840,500 Note: The difference between the current and the quick ratio is due to inventory only. Contract with Supplier Bill to: Ferguson Company 510 SW 23rd St. Dayton, Ohio 23716 Description Powerbank Processing fee Quantity ? Order: 12137 September 10, 20X1 Price $30 Total Thank you for your business!
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