Norsk Optronics, ALS, of Bergen, Norway, had a current ratio of 2.5 on June 30 of the current year. On that date, the company’s assets were: The Norwegian currency is the krone, denoted here by the symbol Kr. Required: What was the company’s working capital on June 30? What was the company’s acid-test ratio on June 30? The company paid

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Norsk Optronics, ALS, of Bergen, Norway, had a current ratio of 2.5 on June 30 of the current year. On that date, the company’s assets were:

Kr 90,000 Cash Accounts receivable, net 260,000 490,000 Inventory Prepaid expenses 10,000 Plant and equipment, net 800,0

The Norwegian currency is the krone, denoted here by the symbol Kr.


Required:

  1. What was the company’s working capital on June 30?
  2. What was the company’s acid-test ratio on June 30?
  3. The company paid an account payable of Kr40,000 immediately after June 30.

a. What effect did this transaction have on working capital? Show computations.

b. What effect did this transaction have on the current ratio? Show computations.

Related Book For answer-question

Managerial Accounting

13th Edition

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

ISBN: 978-0697789938