Question

Phps, Inc. had the following financial data for the year ended December 31, 2019. Cash equivalents Long term investments Total current liabilities $44.000 77.000 55,000 140,000 What is the cash ratio as of December 31, 2010, for Phillips, Inc.? (Round your answer to two decimal places.) OA 0.48 OB 0.38 OC 0.83

Answer 1

Answer to question 1

Cash Ratio = (Cash + Marketable securities )/ Current liability

Cash + Marketable sec = 44000+77000 = 1,21,000

Current Liability = 146000

Hence,

( 44000 + 77000 )/146000 = 0.83

Ans 0.83

Option C

2. Solution and Answer to QUestion 2

	Units	Rate	Value
Opening balance	400	80	32000
Purachase	800	82	65600
	1200		97600
Weighted average cost			97600 / 1200 = 81.33
			81.33333
Calculation of closing Quantity
= Opening + Purchase - Sales = Closing Stock
= 400 + 800 -200 - 600 = 400
Value of Inventory		= 400 X 81.33 = 32532
Nearest Doller			32000 Option A

3. Solution and Answer to QUestion 3

	Solution and answer to Question 3
	Under LIFO method of inventory valuation quantity comes last are out for processing first. An
	And valuation of remaining item would be based on their cost.
		Units	Rate	Value
Jan 01, 2018	Opening	240	70	16800
Jun 10, 2018	Purchase	720	79	56880
March 10 , 2018		80	Last inward before this sale is opening balance
Oc 30 , 2018	Sale	175	Last inward before this sale on June 10 2018
	As per LIFO method Sale Units 80 will be out from inventory lot of 240 units which is opening
	As per LIFO method Sale Units 175 will be out from inventory lot of 720 units which is opening
	Hence Remaining Inventory will be 2 lots which are as follows
		Units	Rate	Value
		=240-80 = 160	70	= 160 X 70 = 11200
		=720-175 = 545	70	= 545X 79 = 43055
			Valuation	= 11200 + 43055 = 54255
	Hence Answer is 54255 Option C

	Solution and answer to Question 4
	Under FIFO method of inventory valuation quantity comes First are out for processing first.
	And valuation of remaining item would be based on their cost.
		Units	Rate	Value
Jan 31, 2018	Purchase	110	30	3300
Feb 28, 2018	Purchase	150	25	3750
	Total Purchase Value			7050	------------------        Equation 1
Mar - Dec	Sales	150	70	10500
	As per FIFO method Sale Units 150 will be out First from First in Inventory Lot i.e. 110 Units and then remaining 40 would be out from inventory lot of 150.
	Hence Remaining Inventory will be 2nd lot Purchase on Feb 28, 2018. Calculation is as follows
		Units	Rate	Value
		=110-110 = 0	30	Nil
		=150 - 40 = 110	25	= 110 X 25 = 2750
	Valuation of Inventory from above working is 2750    ----------------------- Equation 2
	For Calculation of Cost of Good Sold
	Formulae = Opening Inventory + Purchase - Closing Inventory = Cost of Good Sold
	Opening Inventory =			0
	Add : Purchase Value ( From Equation 1 )			7050
	Less : Closing Inventory Value (From Equation 2)			2750
	Balance - Cost of Good Sold			4300
	Answer is 4300 Option B