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he balance sheets for Red Oak Inc. and Birch Co. reflect the following: Red Oak Birch Current assets Cash $ 8,000 $ 16,000 Short-term investments
he balance sheets for Red Oak Inc. and Birch Co. reflect the following:
Red Oak | Birch | |
Current assets | ||
Cash | $ 8,000 | $ 16,000 |
Short-term investments | 4,800 | 0 |
Accounts receivable | 42,000 | 28,800 |
Inventory | 27,200 | 8,000 |
Other | 8,000 | 9,600 |
Noncurrent assets | 456,000 | 507,200 |
Total assets | $546,000 | $569,600 |
Current liabilities | $ 48,000 | $ 48,000 |
Long-term liabilities | 50,000 | 368,000 |
Stockholders equity | 448,000 | 153,600 |
Total liabilities and stockholders equity | $546,000 | $569,600 |
Given the above information, if Red Oak collected some accounts receivable in full,
A. Red Oaks current ratio would increase.
B. Red Oak's quick ratio would increase.
a. Neither A nor B
b. B only.
c. A only.
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