# CMA Study Group

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## fill in the blanks #### Nikunj Sheth16 days ago  • #### 1.  fill in the blanks

Posted 16 days ago
Fill in the blanks on the basis of detail follows

Current Ratio       2.5
Quick Ratio (Acid test ratio)  1.75
Current Liabilities   \$500,000
Inventory turn over    1

Find out (1) The inventory for the company is ______________
(2) The Cost of goods sold is ________________

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Nikunj Sheth
Controller
BRAMPTON ON
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• #### 2.  RE: fill in the blanks

Posted 15 days ago
Hello Nikunj,

Current ratio = Current Assets / Current Liabilities
2.5 = Current Assets / \$500,000 >>>> Current Assets = \$1,250,000
Quick ratio = Current Assets - Inventory / Current Liabilities
1.75 = \$1,250,000 - Inventory / \$500,000 >>>> Inventory = \$1,250,000 - (1.75 x \$500,000)
Inventory = \$375,000
.
Inventory turn over = COGS / Average Inventory
1 = COGS / \$375,0000
COGS = \$375,000

Regards

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Kuwait
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• #### 3.  RE: fill in the blanks

Posted 15 days ago
Current Ratio:  Current Assets (including inventory) / Current Liabilities = 2.5
Current Assets (including inventory) / 500,000 = 2.5
Current Assets (including inventory) = 1,250,000

Quick Ratio (Acid Test):  Current Assets (not including inventory) / Current Liabilities = 1.75
Current Assets (not including inventory) / 500,000 = 1.75
Current Assets (not including inventory) = 875,000

Inventory = Current Assets (including inventory) - Current Assets (not including inventory) = 1,250,000 - 875,000 = 375,000

Inventory Turnover:  COGS / Inventory = 1
COGS / 375,000 = 1
COGS = 375,000

Therefore, 1) The inventory for the company is 375,000
2) The COGS is 375.000

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Martha Walker