Simply Spa Collections had a current ratio of 2.5 to 1 on December 31 of the current year. On that date, the company’s assets were as follows:

Required
a. What was the company's current ratio on December 31?
b. What was the company’s acid-test ratio on December 31?
c. The company paid an account payable of $150,000 immediately after December 31. What effect did this have on the current ratio? Show computations.

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Cash Accounts receivable (net) Inventory Prepaid expenses Equipment (net) Total assets $ 90,000 560,000 860,000 20,000 2,100,000 $3,630,000