(Solution) - Leach Incorporated had the following transactions occur involvin -(2025 Original AI-Free Solution)

Paper Details

Leach Incorporated had the following transactions occur involving current assets and current liabilities during February 2010.
Feb. 3 Accounts receivable of $15,000 are collected.
7 Equipment is purchased for $28,000 cash.
11 Paid $3,000 for a 3-year insurance policy.
14 Accounts payable of $12,000 are paid.
18 Cash dividends of $5,000 are declared.
Additional information:
1. As of February 1, 2010, current assets were $130,000, and current liabilities were $50,000.
2. As of February 1, 2010, current assets included $15,000 of inventory and $2,000 of prepaid expenses.
Instructions
(a) Compute the current ratio as of the beginning of the month and after each transaction.
(b) Compute the acid-test ratio as of the beginning of the month and after each transaction.