Question

the yellow company has a current ratio of 2.65 . The acid test ratio is 2.01 . The current liabilities of the are company $45,000 . Assuming there are no prepaid expenses the dollar amount of merchandise inventoey is

Answer 1

Answer:

Amount of inventory = $28,800

Explanation:

Given:

Current ratio = 2.65

Acid test ratio = 2.01

Current liabilities = $45,000

Prepaid expenses = $0

Find:

Amount of inventory

Computation:

Current ratio = Current assets / Current liabilities

2.65 = Current assets / 45,000

Current assets = $119,250

Acid test ratio = [Current assets - Inventory - Prepaid expenses] / Current liabilities

2.01 = [119,250 - Inventory - 0] / 45,000

90,450 =119,250 - Inventory

Amount of inventory = $28,800