2A2B BIRCH PRODUCTS INC. HAS THE FOLLOWING CURRENT ASSETS. CASH $...

23.

CSO: 2A2a

LOS: 2A2b

Birch Products Inc. has the following current assets.

Cash

$ 250,000

Marketable securities

100,000

Accounts receivable

800,000

Inventories

1,450,000

Total current assets

$2,600,000

If Birch’s current liabilities are $1,300,000, the firm’s

a.

current ratio will decrease if a payment of $100,000 cash is used to pay $100,000

of accounts payable.

b.

current ratio will not change if a payment of $100,000 cash is used to pay

$100,000 of accounts payable.

c.

quick ratio will decrease if a payment of $100,000 cash is used to purchase

inventory.

d.

quick ratio will not change if a payment of $100,000 cash is used to purchase