Galena's statement of financial position is as follows: Current assets Cash $ 154,000 Inventory 185,000
Posted: Mon May 30, 2022 7:05 am
Galena's statement of financial position is as follows:
Current assets
Cash
$
154,000
Inventory
185,000
Prepaid expenses
21,000
Non-current assets
Land
50,000
Building and equipment
145,000
Other
15,000
Total
$
570,000
Current liabilities
165,000
Long-term debt
190,000
Share capital
80,000
Retained earnings
135,000
Total
$
570,000
The company currently sells only on a cash basis and had sales
of $900,000 this past year. How would you expect a change
from cash to credit sales to affect the current and quick
ratios?
Current assets
Cash
$
154,000
Inventory
185,000
Prepaid expenses
21,000
Non-current assets
Land
50,000
Building and equipment
145,000
Other
15,000
Total
$
570,000
Current liabilities
165,000
Long-term debt
190,000
Share capital
80,000
Retained earnings
135,000
Total
$
570,000
The company currently sells only on a cash basis and had sales
of $900,000 this past year. How would you expect a change
from cash to credit sales to affect the current and quick
ratios?