Reference no: EM132949773
On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances:
debit credit
Cash $25,600
AccountsReceivable $47,200
Allowance for Uncollectible Accounts $4,700
Inventory $ 20,500
Land $51,000
Equipment $ 17,500
Accumulated Depreciation $ 2,000
Accounts Payable $29,000
Notes Payable (6%, due April 1, 2022) $55,000
Common Stock $40,000
Retained Earnings $ 31,100
Totals $161,800 $161,800
During January 2021, the following transactions occur:
- January 2 Sold gift cards totaling $9,000. The cards are redeemable for merchandise within one year of the purchase date.
- January 6 Purchase additional inventory on account, $152,000.
- January 15 Firework sales for the first half of the month total $140,000. All of these sales are on account. The cost of the units sold is $76,300.
- January 23 Receive $125,900 from customers on accounts receivable.
- January 25 Pay $95,000 to inventory suppliers on accounts payable.
- January 28 Write off accounts receivable as uncollectible, $5,300.
- January 30 Firework sales for the second half of the month total $148,000. Sales include $10,000 for cash and $138,000 on account. The cost of the units sold is $82,000.
- January 31 Pay cash for monthly salaries, $52,500.
Problem 1: Calculate the current ratio at the end of January.
Problem 2: Calculate the acid-test ratio at the end of January.
Problem 3: Assume the notes payable were due on April 1, 2021, rather than April 1, 2022. Calculate the revised current ratio at the end of January