Firpo Incorporated had the following transactions occur involving current assets and Perform current and acid-test current liabilities during February 1996: ratio analysis.

Feb. 3 Accounts receivable of \(\$ 15,000\) are collected.

7 Equipment is purchased for \(\$ 25,000\) cash.

11 Paid \(\$ 3,000\) for a 3-year insurance policy.

14 Accounts payable of \(\$ 14,000\) are paid.

18 Cash dividends are declared, \(\$ 6,000\).

Additional information:

1. As of February 1,1996 , current assets were \(\$ 140,000\) and current liabilities were \(\$ 50,000\).

2. As of February 1, 1996, 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.