Harwichport company has a current ratio of 3.0 and an acid ration of 2.8 Current

Question

Harwichport company has a current ratio of 3.0 and an acid ration of 2.8 Current assets equal $210,000 of which $5,000 consists of prepaid expenses. The remainder of current assets consists of cash, accounts receivable, marketable securitites, and inventory. What is the amount of Harwichport Company's invntory?

Please show me how you found the answer as I need to show my work.

Thank You

Explanation / Answer

210000/current liabilties = 3 => current liabilties = $70,000 current ratio - acid ratio = inventories/current liabilities => 3-2.8 = inventories/70,000 => inventories = $14,000

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