Eugene Incorporated had the following transactions involving current assets and current liabilities during February 2002.

Additional information:
1. As of February 1, 2002, current assets were \($140,000\), and current liabilities were $50,000.
2. As of February 1, 2002, current assets included \($15,000\) of inventory and \($5,000\) of prepaid expenses.
Instructions

(a) Compute the current ratio as of the beginning of the month and after each transaction.

(b) Compute the acid-test ratio as of the beginning of the month and after each transaction.

Transcribed Image Text:

Feb. 3 7 11 14 18 Collected accounts receivable of $15,000. Purchased equipment for $25,000 cash. Paid $3,000 for a 3-year insurance policy. Paid accounts payable of $14,000. Declared cash dividends, $6,000.