Alice company has a current ratio of 2.7. the acid test ratio is 2.2. the current liabilities of the Alice Company are $46,000. Calculate the dollar amount of the merchandise inventory?
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Current Ratio = 2.7 Acid test ratio or quick ratio = 2.2
Current liabilities = $ 46, 000
Current Ratio = Current Assets / Current Liabilities
Current Assets = 2.7 * $46,000 = $124 200.
Acid Test Ratio = (Current Assets - Merchandise Inventory) / Current Liabilities
Merchandise Inventory = (Current Ratio - Acid Test Ratio) * Current Liabilities
= 0.5 * $ 46, 000 = $ 23, 000
Current liabilities = $ 46, 000
Current Ratio = Current Assets / Current Liabilities
Current Assets = 2.7 * $46,000 = $124 200.
Acid Test Ratio = (Current Assets - Merchandise Inventory) / Current Liabilities
Merchandise Inventory = (Current Ratio - Acid Test Ratio) * Current Liabilities
= 0.5 * $ 46, 000 = $ 23, 000
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