Please Show All Work Involved Thank You The current asset se

Please Show All Work Involved! Thank You!

The current asset section of Stibbe Pharmaceutical Company\'s balance sheet Included cash of $22,000 and accounts recelvable of $42000. The only other current asset is Inventories. The company\'s current ratio Is 2.5 and its acid-test ratio is 2.0 Determine the ending balance In Inventories and total current liablities. Inventories Current liabilities

Solution

Quick ratio = Cash+Accounts Receivable/Current liabilities 2= (22000+42000)/Current liabilites 2 = 64000/Current liabilites Current liabilites = $32000 Current ratio = Current assets/Current liabilities 2.5 = (64000+Inventories)/32000 80000 = 64000+Inventories Inventories = $16000