Charlie’s Computer Connection (CCC) has current liabilities of $5,000, a quick ratio of 1.1, inventory turnover...

Charlie’s Computer Connection (CCC) has current liabilities of $5,000, a quick ratio of 1.1, inventory turnover of 8.0 and a current ratio of 1.2. What did CCC report for cost of goods sold?

Select one:

a. $500

b. $4,000

c. $4,214

d. $6,000

e. None of the above

Expert Solution

Current Ratio = 1.20 = Current Asset/Current Liabilities

Current Asset = 1.20(5,000) = $6,000

Quick Ratio = 1.10 = (Current Asset - Inventory)/Current Liabilities

Inventory = 6,000 - 1.10(5,000)

Inventory = $500

Inventory Turnover = COGS/Inventory

8 = COGS/500

COGS = $4,000

jeff jeffy answered 2 years ago

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