Highly Suspect Corp. has current liabilities of $415,000, a quick ratio of. 79, inventory turnover of 9.5, and a current ratio of 1.25. What is the cost of goods sold for the company?

1. Current ratio = Current assets

Current liabilities

1.25 = Current assets

$415,000

Current assets = 1.25 x $415,000

Current assets = $518,759

2. Quick ratio = Current assets - Inventory

Current liabilities

0.79 = $518,750 - Inventory

$415,000

0.79 x $415,000 = $518,750 - Inventory

$327,850 = $518,750 - Inventory

Inventory = $518,750 - $327,850

Inventory = $190,900

3. Inventory turnover = Cost of goods sold

Inventory

9.5 = Cost of goods sold

$190,900

Cost of goods sold = 9.5 x $190,900

Cost of goods sold = $1,813,550

Explanation:

In the first instance, there is need to apply the formula of current ratio in which current ratio and current assets have been given with the exception of current assets. Therefore, current asset is made the subject of the formula.

In the second case, we will apply the formula of quick ratio, where quick ratio, current assets and current liabilities were known except the inventory. Inventory becomes the subject of the formula.

Finally, we will apply the formula of inventory turnover, where inventory and inventory turnover were known, cost of goods sold is made the subject of the formula.