Appreciate all the help! Been working on this for a couple hours and can't seem to find the right answer. Thanks!
Answer 1.
Before purchase of inventory:
Current Assets = $1,430,000
Current Liabilities = $650,000
Let purchase of inventory be $x
After purchase of inventory:
Current Assets = $1,430,000 + $x
Current Liabilities = $650,000 + $x
Current Ratio = Current Assets / Current Liabilities
1.40 = ($1,430,000 + $x) / ($650,000 + $x)
$910,000 + 1.40 * $x = $1,430,000 + $x
0.40 * $x = $520,000
$x = $1,300,000
Purchase of Inventory = $1,300,000
Answer 2.
After purchase of inventory:
Current Assets = $1,430,000 + $1,300,000
Current Assets = $2,730,000
Inventory = $390,000 + $1,300,000
Inventory = $1,690,000
Current Liabilities = $650,000 + $1,300,000
Current Liabilities = $1,950,000
Quick Ratio = (Current Assets - Inventory) / Current
Liabilities
Quick Ratio = ($2,730,000 - $1,690,000) / $1,950,000
Quick Ratio = 0.53
Appreciate all the help! Been working on this for a couple hours and can't seem to...
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