Shine Limited Has a Current Ratio 4.5:1 And Quick Ratio 3:1; If The Inventory Is 36,000, Calculate Current Liabilities And Current Assets.

By admin -

Shine Limited has a current ratio 4.5:1 and quick ratio 3:1; if the inventory is 36,000, calculate current liabilities and current assets.





Current Ratio = `\frac{Current    asset}{Current    liabilities}`

                     or,`\frac{4.1}{1}`   =  `\frac{Current    asset}{Current    liabilities}`


or,4.5 Current  Liabilities = Current Asset

Quick  Ratio = `\frac{Quick  Asset}{Current   liabilities}`

or,3.1 = `\frac{Quick  Asset}{Current  liabilities}`


or, 3 Current Liabilities = Quick Asset

Quick Asset = Current Asset - Inventory = Current Asset - 36,000

Current Asset - Quick Asset = 36,000

or, 4.5 Current Liabilities - 3  Current Liabilities = 36,000

or, 1.5 Current Liabilities = 36,000

or, Current Liabilities = 24,000

Current Asset= 4.5 Current liabilities

or, Current Asset= 4.5 ❌ 24,000

                           = 1,08,000

Chapter-5 Accounting Ratios-II



Comments

Post a Comment

Popular posts from this blog

Who do you think is the ‘well-dressed customer’ at the shop?

By admin -
Read the following passage. At the shop there was a well-dressed customer. He bent down and asked the little girl, “What kind of a miracle does your brother need? “I don’t know,” she replied with her eyes welling up. “He’s really sick and Mummy says he needs an operation. But my Daddy can’t pay for it, so I have brought my savings.” “How much do you have?” asked the man. “One dollar and eleven cents, but I can try and get some more,” she answered barely audible. Answer the following questions. 1) Who do you think is the ‘well-dressed customer’ at the shop? 2) What did the well-dressed man ask the little girl? 3) “He’s really sick.” Who does title word ‘he’ refer to here ? What is he to Tess? 4) What did he need urgently? 5) How much money did the little girl have with her? SOLUTION 1. I think the well-dressed customer at the shop is Dr. Carlton Armstrong. 2. The well-dressed man asked the little girl what kind of a miracle her brother needed. 3. The word ‘he’ refers to A...
Read more

What Journal Entries Will be Made In the Following Cases When Company Redeems Debentures At the Expiry of Period By Serving the Notice-Solution

By admin -
What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice:  (a) when debentures were issued at par with a condition to redeem them at premium;  (b) when debentures were issued at premium with a condition to redeem that at par; and  (c) when debentures were issued at discount with a condition to redeem them at premium? SOLUTION Journal entries S.No. Particulars L.F. Amount (Rs.) Amount (Rs.) (a) Debenture A/c Dr.   Premium on Redemption of Debenture A/c Dr.      To Debenture Holders A/c   (Amount due for  redemption of Debentures)   Debenture Holders A/c Dr.      To Bank A/c   (Payment made to Debenture Holders) (b) Debenture A/c Dr.      To Debenture Holders A/c   (Amount due for redemption of debentures that were issued at premium with term of redeemable at par)   Debenture Holders A/c Dr.      To Bank...
Read more

Explain the Role of ‘Justice Party’ in Boycotting of Council Elections | bzziii.com

By admin -
answer source Question Read the source given below and answer the questions that follows: Source : The Movement in the Towns The movement started with middle-class participation in the cities. Thousands of students left government-controlled schools and colleges, headmasters and teachers resigned, and lawyers gave up their legal practices. The council elections were boycotted in most provinces except Madras, where the Justice Party, the party of the non-Brahmans, felt that entering the council was one way of gaining some power–something that usually only Brahmans had access to. The effects of non-cooperation on the economic front were more dramatic. Foreign goods were boycotted, liquor shops picketed, and foreign cloth burnt in huge bonfires. The import of foreign cloth halved between 1921 and 1922, its value dropping from Rs. 102 crore to Rs. 57 crore. In many places merchants and traders refused to trade in foreign goods or finance foreign trade. As the boycott movement spread...
Read more