Question

Highly Suspect Corp. has current liabilities of $450,000, a quick ratio of .89, inventory turnover of 6.5, and a current ratio of 1.7. What is the cost of goods sold for the company

Answer 1

Answer:

See below

Explanation:

First , we will compute current ratio

Current ratio = Current asset / Current liabilities

1.25 = Current ratio / $415,000

Current asset = $415,000 × 1.25

Current assets = $518,759

Next is to calculate quick ratio

Quick ratio = Current asset - Inventory / Current liabilities

0.79 = $518,750 - Inventory / $415,000

0.79 × $415,000 = $518,750 - Inventory

$327,850 = $518,750 - Inventory

Inventory = $518,750 - $327,850

Inventory = $190,900

Inventory turnover = Cost of goods sold / Inventory

9.5 = Cost of goods sold / $190,900

Cost of goods sold = 9.5 × $190,900

Cost of goods sold = $1,813,550