Problem 11-11 (Algo) Review problem—understanding liquidity measures LO 1Assume that the current ratio for Arch Company is 2.5, its acid-test ratio is 1.5, and its working capital is $390,000. Answer each of the following questions independently,always referring to the original information.Required:How much does the firm have in current liabilities? (Do not round intermediate calculations.)If the only current assets shown on the balance sheet for Arch Company are Cash, Accounts Receivable, and Merchandise Inventory, how much does the firm have in Merchandise Inventory? (Do not round intermediate calculations.)If the firm collects an account receivable of $117,000, what will its new current ratio and working capital be? (Round "Current ratio" to 1 decimal place.)If the firm pays an account payable of $53,000, what will its new current ratio and working capital be? (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 $58,000, what will its new acid-test ratio be? (Do not round intermediate calculations. Round your answer to 1 decimal place.)i need 4 and 5

Let the current liabilities be X Working capital = Current assets - Current liabilities…

Answered: ssume 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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Problem 11-11 (Algo) Review problem—understanding liquidity measures LO 1

Assume that the current ratio for Arch Company is 2.5, its acid-test ratio is 1.5, and its working capital is $390,000. Answer each of the following questions independently,always referring to the original information.

Required:

How much does the firm have in current liabilities? (Do not round intermediate calculations.)
If the only current assets shown on the balance sheet for Arch Company are Cash, Accounts Receivable, and Merchandise Inventory, how much does the firm have in Merchandise Inventory? (Do not round intermediate calculations.)
If the firm collects an account receivable of $117,000, what will its new current ratio and working capital be? (Round "Current ratio" to 1 decimal place.)
If the firm pays an account payable of $53,000, what will its new current ratio and working capital be? (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 $58,000, what will its new acid-test ratio be? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

i need 4 and 5

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