Mitchell Corporation Has Current Assets Of $1,600,000 Million And Current Liabilities Of $750,000. If They Pay $350,000 Of Their Accounts Payable What Will Their New Current Ratio Be?
The correct option of this multiple choice question (mcq) is (A) as proved below: We are given the following accounting data as shown below: Current Assets (CA)= $1,600,000 Current Liabilities (CL) = $750,000 Required New Current Ratio (CR) after making payments to accounts payable = ? We know that current ratio is calculated by using the following formula: Current Ratio = Current Assets / Current Liabilities The entry to record for making payments to accounts payable by Mitchell Corporation is to debit accounts payable account by $350,000 and credit to cash account by $350,000 as shown below: Accounts Payable a/c $350,000 ...