Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that the current ratio for Arch Company 15 2.5, its acid-test ratio is 2.0, and its working capital is $300,000. Answer each of the

image text in transcribed

Assume that the current ratio for Arch Company 15 2.5, its acid-test ratio is 2.0, and its working capital is $300,000. Answer each of the following questlons independently, always referring to the orlginal Information. Required: a. How much does the firm have in current liabilitles? (Do not round intermediate calculations.) b. If the only current assets shown on the balance sheet for Arch Company are Cach, Accounts Recelvable, and Merchandise Inventory, how much does the firm have In Merchandise Inventory? (Do not round Intermediate calculations.) c. If the firm collects an account recelvable of $110,000, what will its new current ratlo and working capital be? (Round "Current ratlo" to 1 decimal place.) d. If the firm pays an account payable of $53,000, what will its new current ratlo and working capltal be? (Do not round Intermediate calculations. Round "Current ratio" to 1 decimal place.) e. If the firm sells inventory that was purchased for $50,000 at a cash price of $55,000, what will its new acid-test ratio be? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Systems Exam Questions And Explanations

Authors: Ph.D. Gleim, Irvin N., Ph.D. Hillison, William A., Grady M. Irwin

17th Edition

ISBN: 1581949278, 978-1581949278

More Books

Students also viewed these Accounting questions