Question

Brief Exercise 24-8 Answer each of the questions in the following unrelated situations.

(a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $529,000, what is the amount of current liabilities? Current Liabilities $

(b) A company had an average inventory last year of $185,000 and its inventory turnover was 5. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year? (Round answer to 0 decimal places, e.g. 125.) Average Inventory $

(c) A company has current assets of $98,000 (of which $43,000 is inventory and prepaid items) and current liabilities of $43,000. What is the current ratio? What is the acid-test ratio? If the company borrows $15,000 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, e.g. 2.50.)

Current Ratio :1

Acid Test Ratio :1

New Current Ratio :1

New Acid Test Ratio :1

(d) A company has current assets of $541,000 and current liabilities of $233,000. The board of directors declares a cash dividend of $194,000. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend? (Round answers to 2 decimal places, e.g. 2.50.)

Current ratio after the declaration but before payment :1

Current ratio after the payment of the dividend :1

Answer 1