In its most recent annual report, Appalachian Beverages reported current assets of $70,300 and a current ratio of 1.90. Assume that the following transactions were completed:. (1) purchased merchandise for $6,700 on account and (2) purchased a delivery truck for $10,000, paying $2,000 cash and signing a two-year promissory note for the balance.
Compute the updated current ratio (round answers to 2 decimal places)Transaction (1) Transaction (2) I am not sure how to do this problem, I understand how to general compute the current ration:.Current raion= currenct assets/current liabilitiesbut how do you do compute an update?If someone could show me how to do this correctly, I will award them lifesaver.

Appalachian Beverages

With reported current assets of $70,300 and a current ratio of 1.90, one can work out the current liabilities from these two.  The current liabilities are equal to $70,300/1.90 - $37,000.  To work back, one can state that current ratio equals $70,300/$37,000 = 1.90.

Having ascertained the value of the former current liabilities, one can use the information to update the two parameters for calculating the current ratio as follows:

Current liabilities increased by $6,700 from purchase of merchandise on account and of a delivery truck by $8,000.  So, the updated current liabilities equal to $37,000 + 6,700 + 8,000 = $51,700.  Similarly, the current assets decreased by $2,000 for the part-payment for the delivery truck.  Thus, current assets are now equal to $68,300 ($70,300 - 2,000).

Having updated the two parameters, one can then compute the updated current ratio as follows:

Current ratio = current assets/current liabilities = $68,300/$51,700 = 1.32.

Explanation:

Appalachian Beverages' current ratio shows the relationship between current assets and current liabilities and the ability of the entity to settle current liabilities with current assets.

im going to come back to you?

do u have any choices