If Mussel Company has working capital of $540,000 and a current ratio of 3 to 1,the amount of current assets is
A)$540,000.
B)$810,000.
C)$270,000.
D)$405,000.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities, and in this case, the ratio is given as 3 to 1.

We can set up the equation:

Current assets / Current liabilities = 3/1

We know that working capital = Current assets - Current liabilities

And we are given that working capital is $540,000

So we can rearrange the equation and substitute:

Current assets = Current liabilities x 3

Working capital = Current assets - Current liabilities

$540,000 = (Current liabilities x 3) - Current liabilities

$540,000 = 2(Current liabilities)

Current liabilities = $270,000

Now that we know current liabilities, we can use the current ratio to find current assets:

Current assets / $270,000 = 3/1

Current assets = $810,000

Therefore, the amount of current assets is $810,000. So, the correct answer is B.

If Mussel Company Has Working Capital of $540,000 and a Current