# Question 21 Chapter 4 of +2-B – USHA Publication 12 Class

Q-21- CH-4 Book 2 - Usha Pub. +2 Book 2020 - Solution

Question 21 Chapter 4 of +2-B

I. Liquidity Ratios

21. (Current Assets & Working Capital after & before the Acquisition of Stock) A firm had current liabilities of ₹ 1,25,000. It then acquired stock in trade at a cost of ₹ 25,000 on credit. After this acquisition, the current ratio 2 : 1. Determine the size of current assets and working capital after and before the inventories was acquired.

## The solution of Question 21 Chapter 4 of +2-B: –

 Current Liabilities before purchasing of stock on credit = ₹ 1,25,000 Stock purchase on credit = ₹ 25,000 Current Liabilities after the purchase of stock on credit = ₹ 1,50,000 Current Ratio after the purchase of stock = 2: 1 If Current Liabilities = ₹ 1,50,000 or 1 Current Assets = ₹ 1,50,000 x 2 = ₹ 3,00,000 Current Assets before Purchase of stock = ₹ 3,00,000 – ₹ 25,000 = ₹ 2,75,000

Working Capital

Before Purchase of stock

 Working Capital = Current Assets – Current Liability = ₹ 2,75,000 – ₹ 1,25,000 = ₹ 1,50,000

After Purchase of stock

 Working Capital = Current Assets – Current Liability = ₹ 2,75,000 – ₹ 1,25,000 = ₹ 1,50,000

What are Liquidity Ratios – Formulas and Examples

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Also, Check out the solved question of previous Chapters: –

## Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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