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Assume that the current ratio for Arch Company is 2.0, its acid-test ratio is 1.5, and its working capital is $ 300,000. Answereach of the following questions independently, always referring tothe original information.

a. How much does the firm have in current liabilities?
b. If the only current assets shown on the balance sheet for ArchCompany are Cash, Accounts Receivable, and Merchandise Inventory,how much does the firm have in Merchandise Inventory?
c. If the firm collects an account receivable of $ 100,000, whatwill its new current ratio and working capital be?
d. If the firm pays an account payable of $ 100,000, what will itsnew current ratio and working capital be?
e. If the firm sells inventory that was purchased for $ 50,000 at acash price of $ 60,000, what will its new acid- test ratio be?

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Nelly Stracke
Nelly StrackeLv2
29 Sep 2019

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Assume that the current ratio for Arch Company is 3.5, its acid-test ratio is 2.0, and its working capital is $330,000. Answer each of the following questions independently, always referring to the original information. Required: a. How much does the firm have in current liabilities? . If the only current assets shown on the balance sheet for Arch Company are Cash, Accounts Receivable, and Merchandise Inventory, how much does the firm have in Merchandise Inventory? (Do not round intermediate calculations.) If the firm collects an account receivable of $106,000, what will its new current ratio and working capital be? ( d. If the firm pays an account payable of $60,000, what will its new current ratio and working capital be? d. If the firm pays an account payable of $60,000, what will its new current ratio and working capital be?

Assume that the current ratio for Arch Company is 3.5, its acid-test ratio is 1.5, and its working capital is $370,000. Answer each of the following questions independently, always referring to the original information.

a. How much does the firm have in current liabilities? (Do not round intermediate calculations.)

b. If the only current assets shown on the balance sheet for Arch Company are Cash, Accounts Receivable, and Merchandise Inventory, how much does the firm have in Merchandise Inventory? (Do not round intermediate calculations.)

c. If the firm collects an account receivable of $114,000, what will its new current ratio and working capital be? (Round "Current ratio" to 1 decimal place.)

d. If the firm pays an account payable of $54,000, what will its new current ratio and working capital be? (Do not round intermediate calculations. Round "Current ratio" to 1 decimal place.)

e. If the firm sells inventory that was purchased for $50,000 at a cash price of $57,000, what will its new acid-test ratio be? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Menardo Corporation began the month of June with $600,000 ofcurrent assets, a current ratio of 2.5:1, and an acid-test ratio of1.4:1. During the month, it completed the following transactions(the company uses a perpetual inventory system).

June 1 Sold merchandise inventory that cost $150,000 for $240,000cash.
3 Collected $176,000 cash on an account receivable.
5 Purchased $300,000 of merchandise inventory on credit.
7 Borrowed $200,000 cash by giving the bank a 60-day, 8%note.
10 Borrowed $240,000 cahs by signing a long-term securednote.
12 Purchased machinery for $550,000 cash.
15 Declared a $1 per share cash divedend on its 160,000 shares ofoutstanding common stock.
19 Wrote off a $10,000 bad debt against the Allowance for DoubtfulAccounts account.
22 Paid $24,000 cash to settle an account payable.
30 Paid the dividend declared on June 15.
Required
Prepare a table showing the company's (1) current ratio,(2)acid-test ratio, and (3) working capital after each transaction.Round ratios to two decimals.

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