Question

Answer each of the questions in the following unrelated situations. (a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $531,000, what is the amount of current liabilities? Current Liabilities $ (b) A company had an average inventory last year of $180,000 and its inventory turnover was 6. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year? (Round answer to 0 decimal places, eg. 125.) Average Inventory $ (c) A company has current assets of $86,000 (of which $41,000 is inventory and prepaid items) and current liabilities of $41,000. What is the current ratio? What is the acid-test ratio? If the company borrows $17,000 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, e.g. 2.50.) Current Ratio Acid Test Ratio New Current Ratio New Acid Test Ratio (d) A company has current assets of $578,000 and current liabilities of $229,000. The board of directors declares a cash dividend of $167,000. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend? (Round answers to 2 decimal places, e.g. 2.50.) Current ratio after the declaration but before payment Current ratio after the payment of the dividend

Answer 1

current current Assets liabilites Current ratio re m Current Acid-test ratio - Current Prventory G B Assent st current liabilities a) current habities current rahos : 2 + $531000 = 57. Acid-test ratio =1:1 - Current Mobilites 4 531,000 +Liege - $132,750 b) last yeas I turnover - cost of goods sold Average inventory ... cost of goods sold = $180,000x 6 = $1,080,000 ennentory turnovel - current year Average inventory -> $1,080,00° → $135,000) Current ratio = 486000 - 2.40 $86000 - 41000 = 6:10] Acid-test ratio > 41,000 Revised Current Astets current liabilines $ 56,000 + $19000 = $103,000 41000 + 17000 = 58,000 . New Current ratio $103,000 55 000 > t o New acid test ratio = $ 103,000 - 41000 58000 11.07) d) current ratio before payment of dividend :- current ratio $578,000 $229,000+ - 2003 1.46 $16700D

current ratio after payment of dividendi current Assets $578000 – 167000 = $411,000 current wahilities to 229000 - 67000 69000 $229,000. -- Current ratio , 4110001 - 11.79 229,000