Acc280 Financial Accounting: E15-6 Leach Incorporated had the following transactions

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Acc280 Financial Accounting
E15-6
Leach Incorporated had the following transactions occur involving current assets and current liabilities during February 2008.
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, 2008, current assets were $130,000, and current liabilities were $50,000.
2. As of February 1, 2008, 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.
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