Question

A company has current assets that total $500,000, a current ratio of 2.00, and uses the perpetual inventory method. Assume that the following transactions are then completed:
(1) Sold $12,000 in merchandise on short-term credit for $15,000,
(2) Declared but did not pay dividends of $50,000,
(3) Paid prepaid rent in the amount of $12,000,
(4) Paid previously declared dividends in the amount of $50,000,
(5) Collected an account receivable in the amount of $12,000, and
(6) Reclassified $40,000 of long-term debt as a current liability.

Required:
Compute the updated current ratio, rounded to two decimal places, after each transaction.



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  • CreatedFebruary 27, 2015
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