Analyzing the Impact of Selected Transactions on the Current Ratio
Current assets totaled $500,000, the current ratio was 2.00, and the company uses the perpetual inventory method. Assume that the following transactions were completed: (1) sold $12,000 in merchandise on short-term credit for $15,000, (2) declared but did not pay dividends of $50,000, (3) paid prepaid rent in the amount of $12,000, (4) paid previously declared dividends in the amount of $50,000, (5) collected an account receivable in the amount of $12,000, and (6) reclassified $40,000 of long-term debt as a current liability.
Required:
Compute the updated current ratio, rounded to two decimal places, after each transaction.
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