Question 11:
Trade Payables ₹50,000, Working Capital ₹9,00,000,
Current Liabilities ₹3,00,000. Calculate Current Ratio.
Answer:
Working Capital=Current Assets-Current Liabilities
9,00,000=Current Assets−3,00,000
Current Assets=9,00,000+3,00,000=
₹12,00,000
Current Ratio=CurrentAssets/CurrentLiabilities=12,00,000/3,00,000=4:1
Question 12:
Ratio of Current Assets ( ₹3,00,000) to Current
Liabilities ( ₹2,00,000) is 1.5:1. The accountant of the firm is
interested in maintaining a Current Ratio of 2:1 by paying off a part of the
Current Liabilities. Compute amount of the Current Liabilities that should be
paid so that the Current Ratio at the level of 2:1 may be maintained.
Answer:
Current ratio=
Current assets/Current liabilities=1.5:1
The company is interested in maintaining the Current
Ratio of 2:1 by paying off the liability.
Let the liability paid-off by the company = x
∴ New Current Assets = 3,00,000 − x
New Current Liabilities = 2,00,000 − x
New Current ratio=
3,00,000-x/2,00,000-x=2:1
Or 3,00,000-3x=4,00,000-2x
Or 1,00,000
Therefore, liability of ₹1,00,000 need to be
paid-off by the company in order to maintain the Current Ratio of 2 : 1.
Question 13:
Ratio of Current Assets ( ₹8,75,000)
to Current Liabilities ( ₹3,50,000) is 2.5:1. The firm wants to maintain
Current Ratio of 2:1 by purchasing goods on credit. Compute amount of goods
that should be purchased on credit.
Answer:
Current Assets = ₹8,75,000
Current Liabilities = ₹3,50,000
Current Ratio = 2.5:1
The business is interested to maintain its Current Ratio at 2:1 by purchasing
goods on credit.
Let the amount of goods purchased on credit be ‘x’
Current Liabilities = ₹3,50,000 + x
Current Assets = ₹8,75,000 + x
Current ratio= Current assets/Current
liabilities=8,75,,000+x/3,50,000+x=2/1
8,75,000 + x = 7,00,000 + 2x
8,75,000 – 7,00,000 = 2x – x
1,75,000 = x
Therefore, goods worth ₹1,75,000 must be purchased on credit to maintain
the current ratio at 2:1.
Question 14:
A firm had Current Assets of ₹5,00,000. It paid Current
Liabilities of ₹1,00,000 and the Current Ratio became 2:1. Determine
Current Liabilities and Working Capital before and after the payment was made.
Answer:
Firm disposed off liabilities of
₹1,00,000 which results in decrease in current liabilities and current
assets by the same amount.
After disposing liabilities:
Current Assets = ₹4,00,000 ( ₹5,00,000 – ₹1,00,000)
And, Let Current Liabilities be (x – ₹1,00,000)
Current ratio=
Current assets/Current liabilities=4,00,000/x-1,00,000=2:1
4,00,000 = 2x – 2,00,000
6,00,000 =2x
Therefore, x = 3,00,000
Current Liabilities after payment = x – ₹1,00,000 = ₹2,00,000
Working Capital after Payment = Current Assets – Current Liabilities
= ₹4,00,000 – ₹2,00,000 = ₹2,00,000
Current Assets before payment = ₹5,00,000
Current Liabilities before Payment = ₹3,00,000
Therefore, Working Capital Before Payment = Current Assets – Current
Liabilities
= ₹5,00,000 – ₹3,00,000 = ₹2,00,000
Question 15:
A firm had Current Liabilities of ₹5,40,000. It purchased stock of
₹60,000 on credit. After the purchase of stock Current Ratio was 2 : 1.
Calculate Current Assets and Working Capital after and before the stock was
purchased.
Answer:
(Before) Current Liabilities of ₹5,40,000.
Current
Ratio was 2:1 (After the purchase of
stock)
(Before) Current Assets= ? (x)
2/1=x+60,000/5,40,000+60,000
x+60,000=10,80,000+1,20,000
x=12,00,000-60,000
(Before) Current Assetsx=11,40,000
(After) Current
Assetsx=11,40,000+60,000=12,00,000
(After) Current Liabilities of ₹5,40,000+60,000=6,00,000
Working
Capital after
purchase=12,00,000-6,00,000=6,00,000
Working
Capital before
purchase=11,40,000-5,40,000=6,00,000
Ts Grewal Solution 2025-2026
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Class 12 / Volume – III
Chapter 4 – Accounting Ratios