A company with current assets of $100,000 and current liabilities of $50,000 uses $10,000 in cash...
A company with current assets of $100,000 and current liabilities of $50,000 uses $10,000 in cash to pay off a current liability. After this transaction, the company current ratio will equal.
Homework Answers
Journal would be:
current liability a/c..Dr $10,000
To Cash $10,000
Hence current liability and cash balance would decrease by $10,000
Hence total current liability=(50,000-10,000)=$40,000
Total Current assets would be=(100,000-10,000)=$90,000
Current ratio=Current assets/current liability
=90,000/40,000
=2.25
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