Question

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Credit Debit $ 25, 100 46,200 $ 4,200 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) Common Stock Retained Earnings 20,000 46,000 15,000 че 1,500 28,500 50,000 35,000 33,100 $152,300 Totals $152,300 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $147,000. January 15 Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $ 73,800. January 23 Receive $125,400 from customers on accounts receivable. January 25 Pay $90,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $4,800. January 30 Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500. January 31 Pay cash for monthly salaries, $52,000.

Answer 1

a-1)

Current Ratio
Choose Numerator	/	Choose Denominator	=	Current Ratio
Total Current Assets	/	Total Current Liabilities	=	Current Ratio
$377,500	/	$93,500	=	4.04

Working notes:

Total Current Assets at the end of Jan. 31, 2021:
Cash ($25,100 + $125,400 - $90,000 + $11,000 - $52,000 + $8,000)	$27,500
Accounts Receivable ($46,200 + $135,000 - $125,400 - $4,800 + $132,000)	$183,000
Inventory ($20,000 + $147,000)	$167,000
Total Current Assets at the end of Jan. 31, 2021 (a)	$377,500
Total Current Liabilities at the end of Jan. 31, 2021:
Accounts Payable ($28,500 + $147,000 - $90,000)	$85,500
Diferred Revenue	$8,000
Total Current Liabilities at the end of Jan. 31, 2021	$93,500