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Question: 1. The Intramural Sports Club reports sales revenue of $550,000. Inventory at both the beginning and end of the year totals $100,000. The inventory turnover ratio for the year is 4.0. What amount of gross profit does the company report in its income statement?
2. Dungy Training Company has a current ratio of 0.80 to 1, based on current assets of $6 million and current liabilities of $7.5 million. How, if at all, will an $800,000 cash purchase of inventory affect the current ratio? How, if at all, will an $800,000 purchase of inventory on account affect the current ratio?
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