Question

Highly Suspect Corp. has current liabilities of $401,000, a quick ratio of 1.50, inventory turnover of 3.70, and a current ratio of 3.60. What is the cost of goods sold for the company?

Answer 1

$3,115,770

Step-by-step explanation:

Given:

Current ratio = 3.60

Current liabilities = $401, 000

Quick ratio = 1.50

Inventory turnover = 3.70

Current ratio is calculated by dividing your current assets by your current liabilities.

`Current\ ratio = (Current\ Assets)/(Current\ Liabilities)`

`3.60 = (Current\ Assets)/(401, 000)`

Current Assets = 3.60 × 401,000

= $1,443,600

`Quick\ ratio = ((Current\ Assets\ -\ Inventory))/(Current Liabilities)`

`1.50 = (1,443,600\ -\ Inventory)/(401,000)`

1.50 × 401,000 = 1,443,600 - Inventory

601,500 = 1,443,600 - Inventory

Inventory = 1,443,600 - 601,500

= $842,100

`Inventory\ Turnover = (Cost\ of\ Goods\ Sold)/(Inventory)`

`3.70 = (Cost\ of\ Goods\ Sold)/(842,100)`

Cost of Goods Sold = 3.70 × 842,100

= $3,115,770