payment.
12. Ratio of Current Assets R 3,00,000) to Current Liabilities (2,00,000) is 1.5 : 1. The accountant of the
firm is interested in maintaining a Current Ratio of 2:1 by paying off a part of the Current Liabilities.
Compute amount of the Current Liabilities that should be paid so that the Current Ratio at the level of
2:1 may be maintained.
Answers
Answer:
Explanation:
2/1=300,000-x/200,000-x
400,000-2x=300,000-x
100,000= x
so the accountant of the firm need to pay the liabilities of amount rs 100,000
the ratio will be 200,000/100,000= 2:1
Liability of Rs 1,00,000 need to be paid off by the firm to maintain level of Current Ratio 2 : 1
Explanation:
Current Ratio = Current Assets / Current Liabilities = 1.5/1
The firm is interested in maintaining a Current Ratio of 2 : 1 by paying off a part of the Current Liabilities
Let,
The amount of Current Liabilities to be paid off by the firm = x
New Current Assets = 3,00,000 - x
New Current Liabilities = 2,00,000 - x
New Current Ratio = 3,00,000 - x /2,00,000 - x = 2/1
⇒ 1 (3,00,000 - x) = 2 (2,00,000 - x)
⇒ 3,00,000 - x = 4,00,000 - 2x
⇒ 3,00,000 - 4,00,000 = -2x + x
⇒ - 1,00,000 = - x
⇒ x = 1,00,000
The Ratio will be,
2,00,000/1,00,000 = 2/1
∴ Liability of Rs 1,00,000 need to be paid off by the firm to maintain level of Current Ratio 2 : 1