Question

Q Finance 301. Quiz, Flash: x | G Griffins Goat Farm, inc. × Q Financal Management En × X Quiz ,1 Fin 361 Qch2Aiging Training .. t html ← -) https:/ Saved Quiz #1 Fin 360 Highly Suspect Corp has current liabilities of $418,000, a quick ratio of 1.80, inventory turnover of 4.50, and a current ratio of 3,40. What is the cost of goods sold for the company? Multiple Choice $1.203,840 $3,009600 $752,400 $836,000 $6,395,400 O Type here to search < Prey 18 or 2011 Next >

Answer 1

$3,009,600

Solution:

Current Ratio = Current Assets/Current Liabilities

$\therefore$ Current Assets = Current Ratio * Current Liabilities

Current Assets = 3.4 * $418,000

                       = $1,421,200

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

Assume, Inventory = x

1.80 = (1,421,200 - x) / 418,000

752,400 = $1,421,200 - x

x = 1,421,200 - 752,400

x = 668,800

Inventory = $668,800

Inventory Turnover Ratio = Cost of Goods Sold / Inventory

Cost of Goods Sold = Inventory Turnover Ratio * Inventory

Cost of Goods Sold = 4.5 * $668,800

                             = 3,009,600

Cost of Goods Sold = $3,009,600.

Thanks