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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
A firm had Current Liabilities of ₹5,40,000. It purchased stock of ₹60,000 on credit. After the purchase of stock, the Current Ratio was 2:1. Calculate the Current Assets and Working Capital, both after and before the stock was purchased.
Purchasing stock of ₹60,000 on credit increases both Current Assets and Current Liabilities by ₹60,000. Let Current Assets before the purchase be x.
After purchase: Current Assets = x + 60,000; Current Liabilities = 5,40,000 + 60,000 = 6,00,000.
New Current Ratio: (x + 60,000) ÷ 6,00,000 = 2:1
x + 60,000 = 12,00,000
x = ₹11,40,000 (Current Assets before purchase)
Current Assets after purchase = 11,40,000 + 60,000 = ₹12,00,000
Current Liabilities after purchase = 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
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.15 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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