You are given the following simplified statement of financial position of the Hackin Company as at 30 June year 9.

a Calculate the company’s current ratio and liquidity ratio.
b The following transactions take place during July year 9:
i New plant and equipment are bought for £80,000, and payment is made in cash.
ii Additional inventories of goods are bought for £15,000; it is agreed that they will be paid for in August.
Prepare a revised statement of financial position after these transactions have been recorded.
c How do these transactions affect the current ratio and the liquidity ratio?

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Non-current assets 250,000 Current assets Inventories (at cost) 60,000 Receivables 40,000 Cash 120,000 220,000 Total assets 470,000 Current liabilities Payables 100,000 Equity Share capital 250,000 Retained earnings 120,000 370,000 Total equity and liabilities 470,000