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6 November, 22:57

Lee Company has a current ratio of 2.65. The acid test ratio is 2.01. The current liabilities of Lee are $45,000. The dollar amount of merchandise inventory is: (Assume no prepaid expenses) $28,008 $28,800 $90,450 $90,540 None of these

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  1. 6 November, 23:03
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    Given:

    Current ratio: 2.65

    acid test ratio: 2.01

    current liabilities: $45,000

    Current ratio = current asset / current liabilities

    2.65 = current assets / 45,000

    2.65 * 45,000 = current assets

    119,250 = current assets

    Acid test ratio = (current assets - stocks) / current liabilities

    2.01 = (current assets - stocks) / 45,000

    2.01 * 45,000 = current assets - stocks

    90,450 = current assets - stocks

    119,250 - 90,450 = 28,800 is the dollar amount of merchandise inventory.
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