BSO, Inc. has current assets of $1,000,000 and current liabilities of $500,000, resulting in a current ratio of 2.0. For each of the following transactions, determine whether the current ratio willincrease, decrease, or remain the same. Consider each item, ( a )-( d ), independent of the others.a. Purchased $20,000 of supplies on credit.b. Paid Accounts Payable in the amount of $50,000.c. Recorded $100,000 of cash contributed by a stockholder for common stock.d. Borrowed $250,000 from a local bank, to be repaid in 90 days.

Question

BSO, Inc. has current assets of $1,000,000 and current liabilities of $500,000, resulting in a current ratio of 2.0. For each of the following transactions, determine whether the current ratio will
increase, decrease, or remain the same. Consider each item, ( a )-( d ), independent of the others.
a. Purchased $20,000 of supplies on credit.
b. Paid Accounts Payable in the amount of $50,000.
c. Recorded $100,000 of cash contributed by a stockholder for common stock.
d. Borrowed $250,000 from a local bank, to be repaid in 90 days.

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