Metlock, Inc. had the following transactions involving current assets and curren

Question

Metlock, Inc. had the following transactions involving current assets and current liabilities during February 2017. Feb. 3 Collected accounts receivable of $17,600. 7 Purchased equipment for $28,200 cash. 11 Paid $4,700 for a 1-year insurance policy. 14 Paid accounts payable of $11,400. 18 Declared cash dividends, $8,200. Additional information: As of February 1, 2017, current assets were $131,500 and current liabilities were $34,500. Compute the current ratio as of the beginning of the month and after each transaction. (Round all answers to 2 decimal places, e.g. 1.8 Current ratio as of February 1, 2014 T 381.1 Feb. 3 Feb. 7 Feb. 11 Feb. 14 3.81 :1 2.99:1 3.98:1 Feb. 18 All Rights Reserved. A Division of John Wiley& 2 4

Explanation / Answer

On Feb 18th only decalred not paid when dividend is decalred liability is created hence

Current Ratio =91900/31300=2.94

Current Asset Current Liabilities Beginning 131500 34500 3.81 Feb-03 0 0 131500 34500 3.81 Feb-07 -28200 0 103300 34500 2.99 Feb-11 0 103300 34500 2.99 Feb-14 -11400 -11400 91900 23100 3.98 Feb-18 0 8200 91900 31300 2.94

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