Ple edugen.wileyplus.com tudent/mainfr.uni Grades and Attenda o DWileyPLUS-Horne
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Question
Ple edugen.wileyplus.com tudent/mainfr.uni Grades and Attenda o DWileyPLUS-Horne ) Google D Holy Sav or Academ Free On-Line English 3Blackbw ent Exercise 18-6 Keener Incorporated had the following transactions occur involving current assets and current liabilities during February 2017 Feb. 3 Accounts receivable of $14,100 are collected 7 Equipment is purchased for $27,200 cash. 11 Paid $2,200 for a 1-year insurance policy, 14 Accounts payable of $11,300 are paid. 18 Cash dividends of $5,200 are declared. Additional information 1. As of February 1, 2017, current assets were $131,200, and current liabilities were $50,900. 2. As of February 1, 2017, current assets included $15,400 of inventory and $1,700 of prepaid expenses. (a) Compute the current ratio as of the beginning of the month and after each transaction (b) Compute the acid-test ratio as of the beginning of the month and after each transaction (Round answers to 1 decímal place, e.g. 1.6.) Current ratio Acid-test ratio February 1 February 3 February 7 o searchExplanation / Answer
1. Current Ratio=Current Assets/Current liabilities.
2. Acid test Ratio=(Current Assets-Inventory)/Current liabilities.
Date Current Ratio Acid Test Ratio
1.Febraury 1st ($131,200)/$50,900=2.58 ($131,200-$15,400-$1,700)/$50,900=2.24
2.Febraury 3rd ($131,200)/$50,900=2.58 ($131,200-$15,400-$1,700)/$50,900=2.24
(Since trade receivables are converted to cash and Cash is also current asset , there is no change in ratios on Feb 3rd)
3.Febraury 7th ($131,200-$27,200)/$50,900=2.04 ($131,200-$1,700-$15,400-$27,200)/$50,900=1.71
4.Febraury 11th ($131,200-$27,200-$2,200)/$50,900=2 ($131,200-($1,700+$2,200)-$15,400- $27,200-$2,200)/$50,900=1.62
5.Febraury 14th ($131,200-$27,200-$2,200-$11,300)/ ($131,200-($1,700+$2,200)-$15,400-
($50,900-$11,300)=2.29 $27,200-$2,200-$11,300)/($50,900-$11,300)=1.80
6.Febraury 18th $131,200-$27,200-$2,200-$11,300-$5,200)/ ($131,200-($1,700+$2,200)-$15,400-
($50,900-$11,300)=2.15 $27,200-$2,200-$11,300-$5,200)/
($50,900-$11,300)=1.67