Keener Incorporation had the following transactions occur involving current assets and current liabilities during February 2020.
| Feb. 3 | Accounts receivable of $15,000 are collected. |
| 7 | Equipment is purchased for $28,000 cash. |
| 11 | Paid $3,000 for a 3-year insurance policty |
| 14 | Accounts payable of $12,000 are paid |
| 18 | Cash dividends of $5,000 are declined. |
Additional information:
- as February 1, 2020, current assets were $110,000, and current liabilities were 450,000
- As of February 1, 2020, current assets included $15,000 of inventory and $2,000 of prepaid expenses.
Instructions
- Compute the current ratio as of the beginning of the month and after each transaction.
- Compute the acid-test ratio as of the beginning of the month and after each transaction.
Solution
