How can the quick ratio be determined with the given information?
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter20: Accounting For Inventory
Section: Chapter Questions
Problem 1ANFS
Related questions
Question
How can the quick ratio be determined with the given information?
![Email from Accounting Manager
To: Andy Barker, Accounting Associate
From: Doris Butterscotch, Accounting Manager
RE: Inventory Costs
Hi Andy,
This is the first year we are adopting the EOQ model in inventory management. The CFO wants us to calculate cost of goods
sold and inventory turnover for the year.
L
We do not produce the powerbanks ourselves. We purchase them from the wholesaler and resell them to customers.
Therefore, inventory costs consist of only purchase costs, fixed ordering costs per order, and carrying costs. Because we use
a computer reorder system, there are no stockout costs.
We signed a contract with the wholesaler that fixes the purchase cost per powerbank and the order cost per order from 20X1
to 20X3. Carrying cost averages $6 per powerbank, and annual demand is expected to be 144,000 units.
Please contact me if you need additional information.
Regards,
Doris](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9d21e0a7-5372-4e78-a1cf-63417189e9f3%2F7bb7152c-7b5e-480e-9df2-6094a95e7c8f%2F1v56s6k_processed.png&w=3840&q=75)
Transcribed Image Text:Email from Accounting Manager
To: Andy Barker, Accounting Associate
From: Doris Butterscotch, Accounting Manager
RE: Inventory Costs
Hi Andy,
This is the first year we are adopting the EOQ model in inventory management. The CFO wants us to calculate cost of goods
sold and inventory turnover for the year.
L
We do not produce the powerbanks ourselves. We purchase them from the wholesaler and resell them to customers.
Therefore, inventory costs consist of only purchase costs, fixed ordering costs per order, and carrying costs. Because we use
a computer reorder system, there are no stockout costs.
We signed a contract with the wholesaler that fixes the purchase cost per powerbank and the order cost per order from 20X1
to 20X3. Carrying cost averages $6 per powerbank, and annual demand is expected to be 144,000 units.
Please contact me if you need additional information.
Regards,
Doris
![Financial Information / Ratio
Financial Information
20X1
Sales ($50 per unit)
$6,650,000
Current assets
$4,000,000
Current liabilities
$2,840,500
Note: The difference between the current and the quick ratio is due to inventory only.
Contract with Supplier
Bill to:
Ferguson Company
510 SW 23rd St.
Dayton, Ohio 23716
Description
Powerbank
Processing fee
Quantity
?
Order: 12137
September 10, 20X1
Price
$30
Total
Thank you for your business!](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9d21e0a7-5372-4e78-a1cf-63417189e9f3%2F7bb7152c-7b5e-480e-9df2-6094a95e7c8f%2F3c99xra_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Financial Information / Ratio
Financial Information
20X1
Sales ($50 per unit)
$6,650,000
Current assets
$4,000,000
Current liabilities
$2,840,500
Note: The difference between the current and the quick ratio is due to inventory only.
Contract with Supplier
Bill to:
Ferguson Company
510 SW 23rd St.
Dayton, Ohio 23716
Description
Powerbank
Processing fee
Quantity
?
Order: 12137
September 10, 20X1
Price
$30
Total
Thank you for your business!
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